RESULTS - IFRS 2011 · 2012-01-31 · 4 HIGHLIGHTS IN PERIOD HIGHLIGHTS IN PERIOD RESULTS Net profit totaled R$7,755 million in 2011, up 5.1% (or R$373 million) in comparison to R$7,382

1

RESULTS - IFRS 2011

2

CONTENTS

CONTENTS

KEY CONSOLIDATED DATA 03

HIGHLIGHTS IN PERIOD 04

RATINGS 06

MACROECONOMIC ENVIRONMENT 07

RECENT EVENTS AND SUBSEQUENT EVENTS 08

STRATEGY 09 09

EXECUTIVE SUMMARY 10

SANTANDER'S RESULTS IN BRAZIL

ACCOUNTING AND MANAGERIAL RESULTS RECONCILIATION 11

MANAGERIAL INCOME STATEMENT 12

BALANCE SHEET 17

RESULTS BY SEGMENT 23

CARDS 24

RISK MANAGEMENT 25

SUSTAINABLE DEVELOPMENT AND CORPORATE GOVERNANCE 27

SUMMARIZED BALANCE SHEET AND MANAGERIAL FINANCIAL STATEMENTS 28

ANEXXES 30

3

KEY CONSOLIDATED DATA

KEY CONSOLIDATED DATA The following information is based on the consolidated results of Banco Santander (Brasil) S.A. and was prepared in accordance with International Financial Reporting Standards (IFRS). More financial information (unaudited) is presented in the attachment. The complete audited financial statements for 2011 will be available in the Investor Relations site and at the regulatory bodies by March 30, 2012.

The following data on the results and performance indicators are managerial, since they are based on the accounting results adjusted for the fiscal hedge operations of the investments in the Cayman branch and for the unification of accounting classification of the leasing transactions, carried out during the integration of the systems of Santander Leasing Arrendamento Mercantil, and non-recurring events considered relevant. We emphasize that these adjustments have no effect on net income. The reconciliation of the accounting result and the managerial result is available on page 11 of this report.

2011 2010 Var. 4Q11 3Q11 Var. 2011x2010 4Q11x3Q11

,

RESULTS (R$ million)

Net interest income 27,902 24,645 13.2% 7,604 6,899 10.2%

Net fees 7,339 6,834 7.4% 1,855 1,836 1.0%

Allowance for loan losses (9,383) (8,783) 6.8% (2,320) (2,703) -14.2%

Administrative and personnel expenses (12,372) (11,230) 10.2% (3,360) (3,086) 8.9%

Net profit 7,755 7,382 5.1% 1,799 1,802 -0.2%

BALANCE SHEET (R$ million)

Total assets 399,886 374,663 6.7% 399,886 414,983 -3.6%

Securities 75,257 89,823 -16.2% 75,257 74,743 0.7%

Loan portfolio¹ 194,184 160,559 20.9% 194,184 184,727 5.1%

Individuals 63,413 50,981 24.4% 63,413 60,170 5.4%

Consumer finance 30,459 26,969 12.9% 30,459 28,712 6.1%

SMEs 47,940 38,178 25.6% 47,940 44,179 8.5%

Corporate 52,373 44,431 17.9% 52,373 51,666 1.4%

Expanded Credit Portfolio2 208,862 172,174 21.3% 208,862 199,270 4.8%

Funding from Clients3 180,508 159,882 12.9% 180,508 178,428 1.2%

Total final equity 78,032 73,364 6.4% 78,032 76,992 1.4%

Total average equity excluding goodwill4 47,741 43,563 9.6% 47,741 46,918 1.8%

PERFORMANCE INDICATORS (%)

Return on shareholders' average equity - annualized 10.2% 10.3% -0.1 p.p. 9.5% 9.6% -0.1 p.p.

Return on shareholders' average equity excluding goodwill4 - annualized 16.2% 16.9% -0.7 p.p. 15.1% 15.4% -0.3 p.p.

Return on average asset - annualized 2.0% 2.2% -0.2 p.p. 1.8% 1.8% 0.0 p.p.

Efficiency Ratio5 34.0% 34.2% -0.2 p.p. 35.3% 33.4% 1.9 p.p.

Recurrence6

59.3% 60.9% -1.5 p.p. 55.2% 59.5% -4.3 p.p.

BIS ratio excluding goodwill4/13 19.9% 22.1% -2.2 p.p. 19.9% 19.1% 0.8 p.p.

PORTFOLIO QUALITY INDICATORS (%)

Delinquency7 - IFRS 6.7% 5.8% 0.9 p.p. 6.7% 6.7% 0.0 p.p.

Delinquency8 (more than 90 days) - BR GAAP 4.5% 3.9% 0.6 p.p. 4.5% 4.3% 0.2 p.p.

Delinquency9 (more than 60 days) - BR GAAP 5.5% 4.7% 0.8 p.p. 5.5% 5.3% 0.2 p.p.

Coverage ratio IFRS10 85.5% 98.3% -12.8 p.p. 85.5% 89.0% -3.5 p.p.

Coverage ratio BR GAAP 136.8% 137.1% -0.3 p.p. 136.8% 141.2% -4.4 p.p.

OTHER DATA

Assets under management - AUM (R$ million) 113,022 111,338 1.5% 113,022 115,180 -1.9%

Numbers of credit and debit cards (thousand) 41,699 37,294 11.8% 41,699 41,008 1.7%

Branches 2,355 2,201 154 2,355 2,294 61

PABs (mini branches) 1,420 1,495 (75) 1,420 1,437 (17)

ATMs 18,419 18,312 107 18,419 18,342 77

Total Customers (thousand) 25,299 23,038 2,260 25,299 24,743 556

Total current account (thousand)1119,322 18,085 1,236 19,322 19,080 242

Employees12 54,602 54,406 196 54,602 52,770 1,832

1. Management information.

2. Includes other Credit Risk Transactions with clients ("Debenture", FIDC, CRI, Floating Rate Notes and Promissory Notes) and acquired portfolio.

3. Includes savings, demand deposits, time deposits, debenture, LCA, LCI and Treasury Notes (Letras Financeiras - LFT).

4. Goodwill from the acquisition of Banco Real and Real Seguros Vida e Previdência. In 2011 exclude only the goodwill of the aquisition of Banco Real.

In accordance with the Brazilian Central Bank, the BIS ratio, including the goodwill, is 28.4% in Dec/10 and 24.8% in Dec/11.

5. General expenses/total income .

6. Net commissions / General expenses.

7. (Portfolio overdue by more than 90 days plus loans with high default risk) / credit portfolio.

8. Portfolio overdue by more than 90 days / credit portfolio in BR GAAP.

9. Portfolio overdue by more than 60 days / credit portfolio in BR GAAP.

10. Allowance for loan losses / (portfolio overdue by more than 90 days plus loans with high default risk).

12. Considering Banco Santander (Brasil) S.A. and its subsidiaries consolidated in the balance sheet.

13. Excluding the effect of goodwill as international rules on capital base I.

MANAGEMENT ANALYSIS

11. Active and inactive current account during a 30-day period, according to the Brazilian Central Bank.

4

HIGHLIGHTS IN PERIOD


RESULTS

Net profit totaled R$7,755 million in 2011, up 5.1% (or R$373 million) in comparison to R$7,382 million recorded in the same period of 2010. In the quarter, it decreased by 0.2%.

INDICATORS

Evolution of performance indicators in the twelve month period (2011/2010):

Efficiency ratio: 34.0% in 2011, improving 0.2 p.p.

Recurrence ratio: 59.3% in 2011, down 1.5 p.p.

ROAE: 16.2% in 2011, down 0.7 p.p.

Soundness indicators:

BIS Ratio: 19.9% in 2011, up 0.8 p.p. in three months and decreased 2.2 p.p. in 12 months.

Coverage ratio: 85.5% in December of 2011, down 3.5 p.p. in three months and 12.8 p.p. in the last 12 months.

BALANCE SHEET

Total Assets of R$ 399,886 million, growing 6.7% in the last 12 months.

Loan portfolio of R$ 194,184 million, up 20.9% in the last 12 months. Expanded Credit portfolio increased 21.3% in the

same period to reach R$ 208,862 million.

Total Average Equity of R$ 47,741 million (excluding average goodwill of R$ 27,975 million)

SANTANDER SHARES – BOVESPA: SANB11 (UNIT), SANB3 (ON), SANB4 (PN) AND NYSE (BSBR)

Market Capitalization1 on 29/12/2011: R$ 57 billion or US$ 30 billion

Number of shares (thousand): 399,044,117

Earnings² in 2011 per:

• lot of 1,000 Shares - R$ 19.43

• lot of 10 Units - R$ 20.41

1. Market capitalization: total shares (ON + PN)/105 (Unit = 50 PN + 55 ON) x Unit's closing price with a R$/US$ exchange rate of 1.8571. Excludes the total

amount of shares repurchased until the end of September 2011, which corresponded 746,938,500 shares.

2. Calculation does not consider the fact that the dividends attributed to the preferred shares are 10% higher than those attributed to the common shares.

5


6,499 6,639 6,760 6,899 7,604

4Q10 1Q11 2Q11 3Q11 4Q11

Net interest income R$ million

17.0%

10.2%

1,726 1,7821,866 1,836 1,855

4Q10 1Q11 2Q11 3Q11 4Q11

Net feesR$ million

7.5%

1.0%

2,952 2,959 2,967 3,0863,360

4Q10 1Q11 2Q11 3Q11 4Q11

Administrative and personnel expensesR$ million

13.8%

8.9%

34.2% 34.0%

2010 2011

Efficiency Ratio%

-0.2 p.p.

Individuals32% Consumer

Finance16%

SMEs25%

Corporate27%

Loan Portfolio Breakdown2011

Commercial Bank, 64%

Global Wholesale Banking,

28%

Asset Management

and Insurance,

8%

Profit before tax by segment2011

1,918 2,071 2,0831,802 1,799

4Q10 1Q11 2Q11 3Q11 4Q11

Net profitR$ million

-6.2%

-0.2%

16.9%16.2%

2010 2011

ROAE1

%

1) Net profit annualized divided by average total equity, excluding goodwill.

-0.7 p.p.

6

RATINGS

Santander is rated by the main international agencies and the ratings assigned reflect its operating performance and the quality

of its management. In 4Q11, Standard & Poor’s upgraded Santander Brasil’s rating from BBB- to BBB, reflecting its strong

business and capital position, appropriate risk position and profitability.

The following table presents the ratings assigned by the three major rating agencies.

Ratings as published in the respective rating agency’s reports: Fitch Ratings (April 7, 2011); Standard & Poor’s (November 29, 2011) and Moody’s (June 20, 2011).

RATINGS

Rating Agency Long Term Short Term Long Term Short Term Long Term Short Term

Nacional

Moody's

(outlook)

A2

(stable)Prime-1

Baa2

(positive)Prime-2

Aaa.br

(stable)Br-1

AAA (bra)

(stable)F1+ (bra)

Standard & Poor’s

(outlook)

BBB

(stable)A-3

BBB

(stable)A-3

brAAA

(stable)brA-1

Global Scale Nacional Scale

Local Currency Foreign Currency Nacional

Fitch Ratings

(outlook)

A-

(stable)F1

BBB+

(stable)F2

Deposits - Local Currency Deposits - Foreign Currency

7

MACROECONOMIC ENVIRONMENT

MACROECONOMIC ENVIRONMENT

The Brazilian economy showed signs of moderate economic

activity during the second half of 2011. Third quarter GDP

growth, reported in December, slowed down, dropping from

3.3% in 2Q11 (compared to 2Q10) to 2.1% in 3Q11 (compared

to 3Q10), reflecting the combination of weaker global demand

and the delayed effects of the monetary tightening between

April 2010 and mid-2011. The deceleration was particularly

sharp in industrial production, which remained weak

throughout the year. Domestic demand also recorded a

downturn, but remained stronger than industrial activity,

sustained by continuous gains in employment and income.

Inflation has been declining as a result of the economic

slowdown, but remains a source of concern. The 12-month

IPCA consumer price index declined from the peak reached in

the third quarter to close the year at 6.50%, in line with the

upper limit of the inflation target (4.5% +/- 2 p.p.), mainly

impacted by service prices, which increased by 9.0%, fueled by

rising labor costs. Wholesale prices, on the other hand, have

been posting a milder increase, influenced by the decline in

international commodity prices.

The worsening international scenario, combined with the

relative decline in inflation, and the risks it brings to the

Brazilian economy, reflected in the monetary measures taken

by the Central Bank: the target Selic rate was reduced to 11%

p.a. in December and a few of the macroprudential measures

adopted in 2010 were partially undone in order to stimulate

credit expansion. The outstanding credit provided by the

financial system surpassed R$ 2 trillion by end of 2011 (49.1%

of GDP), representing a 19% year-over-year growth. Growth in

mortgage (44.5% year-over-year) continues to outpace other

lending products. Delinquency increased to 5.5% in December

from 5.3% at the end of the third quarter.

Despite the unfavorable international scenario, Brazil

recorded a robust trade surplus of US$29.8 billion in 2011,

almost 50% higher than the US$20.3 billion posted in 2010. In

spite of the second-half slowdown, commodity prices, on

average, remained higher than in the previous year and were

chiefly responsible for the 27% growth in exports. Imports

increased by 25%, reflecting the expansion of domestic

demand. Net expenses with services and income also

increased in the last months of the year when compared to

the same period in 2010. As a result, the 12-month current

account deficit widened, closing 2011 at US$51.9 billion (2.1%

of GDP).

Foreign Direct Investment remained strong in the last months

of 2011, despite the crisis, and totaled US$66.7 billion in 2011,

more than offsetting the current account deficit. The

turbulence in the international markets seem to have partially

affected other sources of external financing – such as portfolio

investment and some types of external loans –, but overall the

access to international financing remains sufficient to fund

Brazil’s external needs. International reserves ended 2011 at

US$ 352 billion, representing a comfortable buffer against the

international crisis. Nevertheless, the deterioration in the

external scenario has kept the real under some pressure, with

the currency closing the year at R$ 1.88/US$.

Higher tax revenues and a tighter control on the expenditures

have enabled the public sector to deliver a primary surplus

equivalent to 3.3% of GDP in the twelve months through

November 2011 – running above the 3% of GDP target for the

year. Considering the interest payments on the public debt,

the public sector borrowing requirements reached 2.4% of the

GDP in the same period. The fiscal effort, combined with the

lower interest rates and the favorable effect of the currency

weakening (given that the public sector is currently a net

creditor in foreign currency), have led the net public sector

debt to 36.6% of GDP by end-November (compared to 38.8%

in November 2010, down 2.2 p.p. in 12 months). The good

performance of the fiscal accounts further reinforces the

positive view on the Brazilian economy, which has been able

to endure the turbulence from the international crisis with no

substantial risks of fiscal or balance-of-payments problems, at

the same time it preserved a robust, albeit milder, pace of

economic growth.

ECONOMIC AND FINANCIAL INDICATORS 4Q11 3Q11 4Q10

Country risk (EMBI) 220 209 185

Exchange rate (R$/ US$ end of period) 1.876 1.854 1.666IPCA (in 12 months) 6.50% 7.31% 5.91%Benchmark Selic (Annual Rate) 11.00% 12.00% 10.75%CDI¹ 2.67% 3.01% 2.56%

Ibovespa Index (closing) 56,754 52,324 69,305

1. Quarterly effective rate.

8

RECENT EVENTS

RECENT EVENTS

SALE OF SANTANDER SEGUROS

Based on the prior approval granted by the Superintendência de Seguros Privados (SUSEP) on August 23, 2011, the sale (“Transaction”) of all the shares issued by the Company’s wholly-owned subsidiary Santander Seguros S.A. (“Santander Seguros”) was concluded on October 5, 2011. These shares were sold to: (i) Zurich Santander Insurance America, S.L., a holding company headquartered in Spain (“Zurich Santander Insurance”), fifty-one percent (51%) directly or indirectly owned by Zurich Financial Services Ltd. and its subsidiaries (“Zurich”), and forty-nine percent (49%) owned by Banco Santander, S.A. (“Santander Spain”), and (ii) Inversiones Zurich Santander America SPA, a company headquartered in Chile and owned by Zurich Santander Insurance (“Inversiones ZS”). The conclusion of this transaction comprised the effective transfer (i) by Santander Brasil to Zurich Santander Insurance of 11,251,174,948 common shares issued by Santander Seguros, and (ii) by Santander Brasil to Inversiones ZS of three (3) common shares of Santander Seguros, and the payment of the preliminary purchase and sale price of R$2,751,557,571.98 to Santander Brasil. The final purchase and sale price will be established at an appropriate time, based on a special balance sheet to be prepared by Santander Seguros for the period ended September 30, 2011, and on the purchase price adjustment mechanism set forth in the relevant Stock Purchase Agreement dated July 14, 2011. Once this price is defined, Santander Brasil will disclose it to the public in general, and will formalize the offer of the right of first refusal for its shareholders, as set forth in Article 253 of Law 6404/76. The Transaction is part of the strategic alliance abroad between Santander Spain and Zurich, involving the acquisition, by Zurich Santander Insurance, of all property, casualty and life insurers, as well as private pension funds of Santander Spain in Argentina, Brazil, Chile, Mexico and Uruguay. As part of the Transaction, the Bank will offer the insurance products exclusively through its branch network for the next 25 years, with the exception of auto insurance, which is not included in the Transaction’s exclusivity clause. As a result of these agreements, Banco Santander will be remunerated in line with current practices. The Transaction aims to strengthen Banco Santander’s operations in the insurance market by ensuring a wider range of products covering clients that are not currently served by insurers, and by leveraging distribution capacity. The Transaction, under the terms of the applicable regulation, is subject to ratification by SUSEP.

1-Total capital = Santander Spain: 76.97%, Free Float: 22.75% and Employee/others: 0.28%

ADDENDUM TO FORM F-3 AND SALE OF ADS BY SANTANDER

GROUP

On November 14, 2011, Banco Santander formalized a registration request with the Securities and Exchange Commission (“SEC”) for a second addendum to the Registration Statement in Form F-3, with immediate validity, allowing the sale of Banco Santander ADSs or Units by Santander Group companies or by Banco Santander. In addition, pursuant to the supplementary prospectus filed on November 16, 2011, any shareholder of Banco Santander S.A. (“Santander Spain”), Grupo Empresarial Santander S.L., and Banco Madesant – Sociedade Unipessoal S.A. (an affiliate company of the Group) may offer for sale, periodically, up to 310,832,288 Banco Santander’s ADSs or Units. The purpose of said documents is to ensure that approximately 8% of Banco Santander’s capital is registered and available for sale by Banco Santander and some Santander Group subsidiaries. As announced by Santander Spain, the intention of the Santander Group is that this registration is used: (i) to give the Santander Group more flexibility in relation to complying with its commitment of delivering approximately 5% of its shareholding in Banco Santander as set forth in the exchangeable securities issued; and (ii) to comply with the commitment of Santander Spain to ensure a Banco Santander free float of 25% prior to October 2012 (or, subject to an agreement with the Securities, Commodities and Futures Exchange (BM&FBovespa), prior to October 2014), when market conditions are more appropriate. There were no requests for a public offering in Brazil filed with the CVM.

On January 9, 2012, GES transferred to Santander Spain, ADRs representing approximately 5.18% of Santander Brasil's stock, as part of an internal reorganization in the Santander Group, to transfer approximately 4.41% of Santander Brasil's stock to a third party, which shall deliver this shareholding to the holders of exchangeable securities issued by Santander Spain in October 2010, upon the maturity and according to the terms of the Bond. The issuance of these exchangeable securities by Santander Spain was disclosed through a Material Fact dated October 29, 2010. As a result of such transfers, Santander Spain, directly or indirectly, held 78.14% of the voting capital and 76.97% of the total capital of Santander Brasil, while free float corresponded to 22.75% of the total capital¹.

9

STRATEGY

STRATEGY

On the first half of 2011, Santander was focused in the

finalization of the integration process with Banco Real and, in

the second half of the year, once the integration was finished,

the Bank started to execute the Strategic Plan for the 2011-

2013 period. The details of this plan were shared with the

market on September, 2011, when Banco Santander Brasil

attended the Santander Group’s Investor Day in London. Its

main strategic priorities, as presented to the market, are as

follows:

•The focus in improving customer services through quality

services and infrastructure. The goal for opening branches in

the period is between 100 and 120 branches per year;

•To intensify the relationship with customers in order to

become the bank of choice of our customers by 2013;

•To increase the commercial punch in key segments/products,

such as SMEs, issuer cards, acquiring business, mortgages and

auto loans;

•To take advantage of cross selling opportunities for products

and services;

•To continue building and strengthening the Santander brand

in Brazil until it becomes one of the TOP 3 financial brands in

attractiveness;

•To maintain its prudent risk management.

Santander also announced that, in 2012 and 2013, it expects

to increase, by a compound annual growth rate, its net profit

around 15%, revenues in the 14%-16%, costs (includes

amortization) 11%-13% and total loan portfolio 15%-17%, in

accordance with International Financial Reporting Standards

(IFRS).

In addition, there was the launch of the plan “Rio 2 mil e

sempre”, which aims to increase significantly the presence of

the Bank in Rio de Janeiro State.

This actions show that, with of the end of de integration

process, the Bank is now much better equipped to develop its

business, with highly qualified teams, product’s competitive

offerings and a strong communication strategy, and is fully

committed to becoming the best and most efficient bank in

the country in terms of creating value for its shareholders,

ensuring client and employee satisfaction and building an

attractive brand. With this in mind, it is engaged in the

constant pursuit of simplicity, security, efficiency, profitability

and the highest standards of quality.

Positioned as a universal Bank focused on retail, Santander

shares the best global practices that set its business model

apart. Efficient cost management, a strong capital base and

conservative risk management translate this differential,

which is based on 5 main pillars: 1) Customer oriented; 2)

Global franchise; 3) Cost efficiency; 4) Prudent risk

management; and 5) Solid balance sheet.

In the fourth quarter of 2011, Santander launched several

initiatives to improve client service and customer satisfaction,

including improvements designed to simplify and speed up

systems and processes, such as the unification of call center

procedures, more efficient phone service and the replacement

of more than 1,300 ATMs.

It also began providing Van Gogh (high income segment)

clients with a series of new benefits, offering them support for

real estate services during and after purchase, with advisory

services and special conditions.

10

EXECUTIVE SUMMARY

EXECUTIVE SUMMARY

Banco Santander reported net profit of R$7,755 million in

2011, presenting a growth of 5.1% over the same period in

2010 and decline of 0.2% from the previous quarter. Total

average equity in 2011 stood at R$47,741 million, which

excludes R$27,975 million in goodwill (average) from the

acquisition of Banco Real. Return on average equity adjusted

for goodwill was 16.2% in the 2011, declining by 0.7 p.p. from

the same period a year earlier.

In the fourth quarter of 2011, Banco Santander Brasil

concluded the sale of Santander Seguros for R$ 2.7 billion,

which resulted in a profit of R$ 424 million in IFRS. (For more

information see non-recurring events considered relevant on

page 11).

The efficiency ratio stood at 34.0% in 2011, improving by 0.2

p.p. from the same period of 2010. This is largely due to the

increase in revenue from interest and fees, of 13.2% and 7.4%

respectively. General expenses (administrative + personnel),

on the other hand, increased 10.2% in the last 12 months,

partially explained by the impact of the expansion of sales

teams. In the quarter, the efficiency ratio increased by 1.9 p.p.

to 35.3%.

- Sound Balance Sheet: The BIS ratio stood at 19.9% in

December 2011, for a decrease of 2.2 p.p. in the last 12

months. Meanwhile, the coverage ratio stood at 85.5% in

December 2011.

The credit portfolio totaled R$ 194,184 million in December

2011, up 20.9% in twelve months (or an increase of R$ 33,625

million) and 5.1% in the quarter. The Individual segment grew

24.4% in twelve months and 5.4% in the quarter. The most

successful products in the portfolio in both periods were cards

and mortgages.

It’s important to highlight the strong acceleration of activities

in the Consumer Finance segment, thanks to the restructuring

that involved strengthening of the sales team, improved risk

management, and adaptation of products and operations. This

segment registered growth of 12.9% in twelve months and

6.1% in the quarter.

Credit to small and medium enterprises (SME) stood at R$

47,940 million in 4Q11, up 25.6% in twelve months and 8.5%

in the quarter.

The expanded credit portfolio1 grew by 21.3% in the last 12

months and 4.8% on the previous quarter.

Total funding, which includes funding from clients2 and assets

under management, reached R$293,530 million in December

2011, with growth of 8.2% from a year earlier and stable in the

quarter. Funding from clients reached R$180,508 million in the

fourth quarter of 2011, growing 12.9% in the last 12 months

and 1.2% in the quarter.

1-Includes portfolio acquisitions and other operations with credit risk (debentures, receivables-backed investment funds, mortgage-backed securities, promissory notes and promissory notes placed abroad). 2-Include savings deposits, demand deposits, time deposits, debentures, agricultural notes (LCA), real estate notes (LCI) and treasury notes (Letras Financeiras - LTF).

11

SANTANDER BRASIL RESULTS

ACCOUNTING AND MANAGERIAL RESULTS RECONCILIATION

To provide a better understanding of the results in IFRS, this report presents the Managerial Income Statement. The main

difference from the Reported (Accounting) Income Statement is the adjustments made for the fiscal hedge operations of the

investments in the Cayman branch, for the unification of accounting classification procedures for leasing transactions and the

impacts from non-recurring events in the period. Both adjustments have no effect on net profit.

Fiscal Hedge: The effects from fiscal hedge that previously were recorded in the income tax line were reclassified to the gain

(losses) from financial assets and liabilities line. Under Brazilian income tax rules, gains (losses) resulting from the BRL/USD

exchange rate variation on the dollar-denominated investments at the Cayman branch are not taxable (tax deductible). This tax

treatment leads to foreign exchange rate exposure in the tax line. A hedge position, composed of derivatives, was set up so that

the Net Profit is protected from the FX variations related to the foreign exchange exposure of the income tax line. Therefore, our

effective tax rate and the income from gains (losses) on financial assets and liabilities plus exchange rates differences are still

impacted by foreign exchange fluctuations.

Santander Leasing: Unification of the accounting classification of leasing transactions made during the integration of systems. In

2011 there is no effect of this adjustment.

Significant non-recurring events in the period: The gains related to the sale of Santander Seguros S.A. (“Santander Seguros”) to

Zurich Santander Insurance America, stood at R$ 424 million in IFRS1. This value is registered as “net gains on disposal assets

(net)”. Additionally, we increased the provisions for contingencies in the same amount, during the period.

Note that adjustments have no effect on net profit in IFRS. For more information, go to page 16 of this document.

All information, indicators and comments concerning the Income Statement in this report are based on the Managerial Income

Statement, except where stated otherwise.

1. The gain from the sale was higher BR GAAP and amounted to R$ 649 million. The difference between the gain in BR GAAP and IFRS is explained by the difference in goodwill in both

Accounting Standards. In BR GAAP as in IFRS, the net profit was not impacted.

INCOME STATEMENT 2011 Fiscal 2011 2010 Fiscal Leasing 2010 4Q11 Fiscal 4Q11 3Q11 Fiscal 3Q11(R$ Million) Reported Hedge Managerial Reported Hedge Adjustment Managerial Reported Hedge Managerial Reported Hedge Managerial

Net Interest Income 27,902 - - 27,902 24,095 - (550) 24,645 7,604 - - 7,604 6,899 - 6,899

Income from equity instruments 95 - - 95 52 - - 52 35 - - 35 10 - 10

53 - - 53 44 - - 44 7 - - 7 13 - 13

Net fees 7,339 - - 7,339 6,834 - - 6,834 1,855 - - 1,855 1,836 - 1,836

Fee and commission income 8,769 - - 8,769 7,833 - - 7,833 2,281 - - 2,281 2,232 - 2,232

Fee and commision expense (1,430) - - (1,430) (999) - - (999) (426) - - (426) (396) - (396)

(234) (1,646) - 1,412 1,875 272 - 1,603 31 (150) - 181 (1,514) (2,050) 536

Other operating income (expenses) (380) - - (380) (348) - - (348) (158) - - (158) (46) - (46)

Total income 34,775 (1,646) - 36,421 32,552 272 - 32,830 9,374 (150) - 9,524 7,198 (2,050) 9,248

General expenses (12,372) - - (12,372) (11,230) - - (11,230) (3,360) - - (3,360) (3,086) - (3,086)

Administrative expenses (5,728) - - (5,728) (5,304) - - (5,304) (1,558) - - (1,558) (1,441) - (1,441)

Personnel expenses (6,644) - - (6,644) (5,926) - - (5,926) (1,802) - - (1,802) (1,645) - (1,645)

Depreciation and amortization (1,462) - - (1,462) (1,237) - - (1,237) (408) - - (408) (359) - (359)

Provisions (net)¹ (3,061) - (424) (2,637) (1,974) - - (1,974) (1,162) - (424) (738) (645) - (645)

Losses on assets (net) (9,422) - - (9,422) (8,255) - - (8,805) (2,336) - - (2,336) (2,712) - (2,712)

Allowance for loan losses² (9,383) - - (9,383) (8,233) - 550 (8,783) (2,320) - - (2,320) (2,703) - (2,703)

Losses on other assets (net) (39) - - (39) (22) - - (22) (16) - - (16) (9) - (9)

Net gains on disposal of assets 452 - 424 28 140 - - 140 430 - 424 6 15 - 15

Net profit before tax 8,910 (1,646) - 10,556 9,996 272 - 9,724 2,538 (150) - 2,688 411 (2,050) 2,461

Income tax (1,155) 1,646 - (2,801) (2,614) (272) - (2,342) (739) 150 - (889) 1,391 2,050 (659)

Net profit 7,755 - - 7,755 7,382 - - 7,382 1,799 - - 1,799 1,802 - 1,802

1. Includes provisions for civil, fiscal, labor and others litigations.

2. Includes recoveries of loans previously written off.

Gains (losses) on financial assets and liabilities (net)

+ exchange rate differences (net)

Share of results of entities accounted for using the

equity method

Non-recurring

events

Non-recurring

events

12


Net interest income in 2011 was R$ 27,902 million, presenting a growth of

13.2% from the same period of 2010. Compared to the prior quarter, net

interest income grew by 10.2%.

Revenues from credit operations climbed by 19.1% in the last 12 months

and by 8.3 % from the previous quarter, thanks to the growth in the

average portfolio volume, of R$28.1 billion and R$12.2 billion in twelve

months and three months, respectively. Revenues from deposits grew by

22.2% in 12 months but dropped 4.6% in the quarter.

The ‘non-interest bearing liabilities and others’ line declined 5.3% in 12 months. The 21.3% increase in the quarter is mainly due to the reduction in the Selic rate and the investment of the proceeds from the sale of the insurance underwriting business.

2011 2010 Var. 4Q11 3Q11 Var.

(R$ Million) 2011x2010 4Q11x3Q11

Net Interest Income 27,902 24,645 13.2% 7,604 6,899 10.2%

Income from equity instruments 95 52 82.7% 35 10 250.0%

Share of results of entities accounted for using the equity method 53 44 20.5% 7 13 -46.2%

Net fees 7,339 6,834 7.4% 1,855 1,836 1.0%

Fee and commission income 8,769 7,833 11.9% 2,281 2,232 2.2%

Fee and commision expense (1,430) (999) 43.1% (426) (396) 7.6%

Gains (losses) on financial assets and liabilities (net) + exchange rate

differences (net)1,412 1,603 -11.9% 181 536 -66.3%

Other operating income (expenses) (380) (348) 9.2% (158) (46) 243.5%

Total income 36,421 32,830 10.9% 9,524 9,248 3.0%

General expenses (12,372) (11,230) 10.2% (3,360) (3,086) 8.9%

Administrative expenses (5,728) (5,304) 8.0% (1,558) (1,441) 8.1%

Personnel expenses (6,644) (5,926) 12.1% (1,802) (1,645) 9.5%

Depreciation and amortization (1,462) (1,237) 18.2% (408) (359) 13.6%

Provisions (net)² (2,637) (1,974) 33.6% (738) (645) 14.4%

Losses on assets (net) (9,422) (8,805) 7.0% (2,336) (2,712) -13.9%

Allowance for loan losses³ (9,383) (8,783) 6.8% (2,320) (2,703) -14.2%

Losses on other assets (net) (39) (22) 77.3% (16) (9) 77.8%

Net gains on disposal of assets 28 140 -80.0% 6 15 -60.0%

Net profit before tax 10,556 9,724 8.6% 2,688 2,461 9.2%

Income tax (2,801) (2,342) 19.6% (889) (659) 34.8%

Net profit 7,755 7,382 5.1% 1,799 1,802 -0.2%

1. Includes the Cayman tax reclassification, the unification of the accounting classification of leasing transactions and non-recurring events.



MANAGERIAL INCOME STATEMENT¹

2011 2010 Var. 4Q11 3Q11 Var. 2011x2010 4Q11x3Q11

Credit 21,020 17,655 19.1% 5,693 5,258 8.3%

Average Volume 171,500 143,382 19.6% 186,386 174,162 7.0%

Spread (Annualized) 12.3% 12.3% -0.1 p.p. 12.1% 12.0% 0.1 p.p.

Deposits 1,163 952 22.2% 291 305 -4.6%

Average Volume1 116,980 104,533 11.9% 118,769 117,610 1.0%

Spread (Annualized) 1.0% 0.9% 0.1 p.p. 1.0% 1.0% -0.1 p.p.

Non-interest bearing liabilities and others 5,719 6,038 -5.3% 1,620 1,336 21.3%

Total net interest income 27,902 24,645 13.2% 7,604 6,899 10.2%

1. Includes demand deposits, saving deposits and time deposits.

NET INTEREST INCOME (R$ Million)

6,499 6,639 6,760 6,899 7,604

4Q10 1Q11 2Q11 3Q11 4Q11

Net interest income R$ million

17.0%

10.2%

13


GAINS (LOSSES) ON FINANCIAL ASSETS AND LIABILITIES (NET) + EXCHANGE RATE DIFFERENCES

Excluding the effects from tax hedging of the investments at the Cayman branch, gains (losses) on financial assets and liabilities

(net) plus exchange differences totaled R$1,412 million in 2011, representing a decrease of 11.9% from the same period in 2010.

In the quarter, the 66.3% loss reflects the lower financial gains from treasury and clients.

NET FEES

Net fees amounted to R$7,339 million in 2011, up 7.4% from the same period in 2010, driven mainly by commissions on

insurance policies and savings bonds and the sustained growth of the credit card business. In the quarter, total fees increased by

1.0%.

Commissions on insurance policies and savings bonds climbed by 28.8% to R$1,560 million in 2011, partly due to the change in

the effective term of life and personal accident premiums, which in 2011 ceased to be renewed on a monthly basis and began to

be renewed on an annual basis.

Revenues from credit and debit cards totaled R$1,298 million in 2011, increasing 33.9% in the last 12 months, mainly due to the

growth in the acquiring business.

Asset management and pension fund fees came to R$1,204 million in 2011, up 5.9% in the last 12 months and decreased by


GAINS (LOSSES) ON FINANCIAL ASSETS 2011 2010 Var. 4Q11 3Q11 Var. AND LIABILITIES (NET) (R$ Million) 2011x2010 4Q11x3Q11

Total (234) 1,875 -112.5% 31 (1,514) -102.0%

Cayman Fiscal Hedge (1,646) 272 n.a. (150) (2,050) n.a.

Total excluding Cayman Hedge 1,412 1,603 -11.9% 181 536 -66.3%

2011 2010 Var. 4Q11 3Q11 Var. 2011x2010 4Q11x3Q11

Banking fees 2,465 2,369 4.0% 690 650 6.0%

Insurance and capitalization 1,560 1,211 28.8% 309 333 -7.4%

Asset management and pension plans 1,204 1,137 5.9% 306 313 -2.4%

Credit and Debit Cards 1,298 969 33.9% 330 334 -1.2%

Receiving services 515 506 1.8% 148 125 18.0%

Collection 400 398 0.4% 108 100 8.9%

Bills, taxes and fees 116 108 6.7% 39 26 53.7%

Capital markets 419 502 -16.6% 106 107 -0.4%

Foreign trade 400 456 -12.3% 92 102 -9.1%

Others¹ (522) (318) 63.9% (125) (128) -2.8%

Total 7,339 6,834 7.4% 1,855 1,836 1.0%

1. Includes taxes and others.

NET FEES (R$ Million)

14


GENERAL EXPENSES (ADMINISTRATIVE + PERSONNEL)

General expenses (administrative + personnel) totaled R$ 12,372 million

in 2011, up 10.2% from 2010, partially explained by the impact of the

expansion of the sales teams. Compared to the third quarter of 2011,

general expenses increased 8.9% resulting from the increase in both

personnel and administrative expenses.

Administrative expenses amounted to R$ 5,728 million in 2011, up 8.0%

in twelve months and 8.1% in three months. The increase in the quarter

is mainly due to the expansion of the branch network. The lines worth

noting were “Advertising, promotions and publicity”, which reflect the

business strategy, “Transport and travel”, due to the higher number of

events during the period; and “Others”, which reflects the spending with

the modernization of the branch network. Together, these three events

account for approximately 76% of the increase in expenses during the quarter.

Personnel expenses totaled R$ 6,644 million in 2011, up 12.1% in twelve months and 9.5% in the quarter. The increase in the

quarter is mainly due to the wage increase envisaged in the collective bargaining agreement and increase in workforce (1,832

new employees in the quarter).

The efficiency ratio, obtained by dividing general expenses by total revenue, reached at 35.3%, up 1.9 p.p. on the previous

quarter.

2011 2010 Var. 4Q11 3Q11 Var. 2011x2010 4Q11x3Q11

ADMINISTRATIVE EXPENSES

Specialized third-party technical services 1,564 1,504 4.0% 417 396 5.3%

Asset maintenance and conservation 1,087 966 12.6% 286 281 1.9%

Data processing 1,006 889 13.2% 238 241 -1.0%

Advertising, promotions and publicity 493 422 16.9% 161 130 24.2%

Communications 566 555 2.0% 137 144 -4.9%

Transport and travel 174 151 15.4% 61 46 33.0%

Security and surveillance 521 513 1.6% 142 133 6.8%

Others 316 304 3.9% 115 70 63.9%

Total 5,728 5,304 8.0% 1,558 1,441 8.1%

PERSONNEL EXPENSES

Salaries 4,192 3,731 12.3% 1,055 1,087 -3.0%

Social security and pension plans 1,092 994 9.8% 327 248 31.7%

Benefits 866 792 9.3% 222 213 4.0%

Training 116 93 24.4% 38 28 34.7%

Others 379 316 20.1% 161 69 133.9%

Total 6,644 5,926 12.1% 1,802 1,645 9.5%

ADMINISTRATIVE EXPENSES + PERSONNEL EXPENSES 12,372 11,230 10.2% 3,360 3,086 8.9%

DEPRECIATION AND AMORTIZATION 1,462 1,237 18.2% 408 359 13.6%

TOTAL GENERAL EXPENSES AND AMORTIZATION 13,834 12,467 11.0% 3,768 3,445 9.4%

EXPENSES (R$ Million)

35.3 34.0 33.1 33.4 35.3

4Q10 1Q11 2Q11 3Q11 4Q11

Efficiency Ratio%

15


ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses, including the total revenue recovered, reached R$ 9,383 million in 2011, increasing 6.8% over

2010. In the quarter, the provision expense, net of recoveries, fell 14.2%, chiefly due to lower write-offs and the increase in the

recovery of credit written off as loss.

DELINQUENCY RATIO (IFRS)

Delinquency ratio (credits overdue more than 90 days plus performing

loans with high delinquency risk) stood at 6.7% in the fourth quarter,

remaining stable in comparison with the previous quarter. Compared to

the same period in 2010, the ratio went up by 0.9 p.p., driven by the

Individual segment, which registered a 1.4 p.p. increase in the period. The

corporate segment recorded a growth of 0.4 p.p.

Note that the delinquency ratio is more conservative under IFRS than BR

GAAP and therefore is not comparable.

COVERAGE RATIO (IFRS)

The coverage ratio is obtained by dividing the allowance for loan losses by

loans overdue more than 90 days, plus performing loans with high

delinquency risk. In the fourth quarter of 2011, the ratio reached 85.5%,

declining 3.5 p.p. from the previous quarter.

DELINQUENCY RATIO IN BR GAAP (OVER 90 DAYS)

Credits overdue more than 90 days amounted to 4.5% of the total portfolio

in the fourth quarter of 2011, for an increase of 0.2 p.p. in three months, in

line with the growth of Financial System evolution. In the twelve month

period, the delinquency ratio rose 0.6 p.p. as a result of the 1.0 p.p. increase

in the Individual segment.

RESULT OF ALLOWANCE FOR LOAN LOSSES 2011 2010 Var. 4Q11 3Q11 Var. (R$ Million) 2011x2010 4Q11x3Q11

(11,191) (9,600) 16.6% (2,806) (3,126) -10.2%

1,809 818 121.3% 486 423 14.9%

Total (9,383) (8,783) 6.8% (2,320) (2,703) -14.2%

1-In 2010, includes impact of the R$ 550 million due for the unification of accounting classification procedures for leasing transactions.

Expense for allowance for loan losses 1

Income from recovery of credit written off as loss

98.3% 98.1%92.0% 89.0% 85.5%

4Q10 1Q11 2Q11 3Q11 4Q11

Coverage - IFRS

3.9% 4.0% 4.3% 4.3% 4.5%

5.8% 5.9%6.4% 6.5% 6.8%

2.2% 2.4% 2.5% 2.3% 2.4%

4Q10 1Q11 2Q11 3Q11 4Q11

Delinquency¹ – BR GAAP (over 90)

Individual

1. Portfolio overdue by more than 90 days / Credit Portfolio BR GAAP.

Total

Corporate

5.8%6.1%

6.7% 6.7% 6.7%

7.6%7.9%

8.6%8.9% 9.0%

4.3% 4.5%4.9% 4.7% 4.7%

4Q10 1Q11 2Q11 3Q11 4Q11

Delinquency¹ – IFRS (%)

Individual

Total

Corporate

1. Portfolio overdue by more than 90 days plus loans with high default risk / credit portfolio

16


NON-PERFORMING LOANS (OVER 60 DAYS)

Non-performing loans overdue more than 60 days stood at 5.5% in the

4Q11, increasing by 0.8 p.p. in 12 months and by 0.2 p.p. in the quarter.

COVERAGE RATIO (BR GAAP)

The BR GAAP coverage ratio is obtained by dividing the allowance for loan

losses by loans overdue more than 90 days. In the 4Q11, the ratio reached

136.8%, decreasing 4.4 p.p. from the previous quarter and remained

relatively stable in relation to the same period of 2010.

NET PROVISIONS

In the fourth quarter of 2011, additional provisions for contingencies amounting to R$ 424 million were set up. The net

provisions, adjusted for this addition provision, amounted to R$ 2,637 million in 2011, increasing 33.6% in twelve months and

14.4% in three months.

INCOME TAX

Income tax totaled R$ 2,801 million in 2011, 19.6% more than in the same period of 2010 and 34.8% in the quarter.

Note that the tax line includes income tax, social contribution tax, PIS and COFINS and excludes the effects from the Cayman tax

hedge positions, as already explained on page 11 of this report.

2011 2010 Var. 4Q11 3Q11 Var. 2011x2010 4Q11x3Q11

Total Provisions1 (2,637) (1,974) 33.6% (738) (645) 14.4%


NET PROVISIONS (R$ Million)

137.1% 142.2% 143.0% 141.2% 136.8%

4Q10 1Q11 2Q11 3Q11 4Q11

Coverage - BR GAAP

4.7% 5.0% 5.2% 5.3% 5.5%

6.9%7.3%

7.9% 8.0%8.4%

2.7% 3.0% 2.9% 2.9% 2.9%

4Q10 1Q11 2Q11 3Q11 4Q11

NPL¹- Delinquency - BR GAAP (over 60)

Individual

Total

Corporate

1. Portfolio overdue by more than 60 days / Credit Portfolio

17


In December 2011, Total Assets recorded a balance of R$ 399,886 million, up 6.7% in twelve months and down 3.6% in the quarter. The decrease in the quarter reflects the sale of the interest that Banco Santander (Brasil) held in the subsidiary Santander Seguros S.A. (Santander Seguros) to Zurich Santander Insurance America.

Total assets corresponding to Santander Seguros stood at R$24,731,463 in September 2011, chiefly represented by R$21,551,422 of securities (government bonds, private securities and shares in specially constituted funds – guarantors of PGBL/VGBL benefit plans).

Dec/11 Dec/10 Var. Sep/11 Var. Dec11xDec10 Dec11xSep11

Cash and balances with the Brazilian Central Bank 65,938 56,800 16.1% 65,296 1.0%

Financial assets held for trading 29,901 24,821 20.5% 29,783 0.4%

Other financial assets at fair value through profit or loss 666 17,939 -96.3% 657 1.4%

Loans and advances to credit institutions 61 292 -79.1% 93 -34.4%

Debt Instruments 230 224 2.7% 229 0.4%

Equity Instruments 375 17,423 -97.8% 335 11.9%

Available-for-sale financial assets 44,608 47,206 -5.5% 44,237 0.8%

Loans and receivables 202,757 174,107 16.5% 194,132 4.4%

Loans and advances to credit institutions 19,691 22,659 -13.1% 20,294 -3.0%

Loans and advances to customers 194,184 160,559 20.9% 184,727 5.1%

Debt Instruments 62 81 n.a. 80 n.a.

Allowances for credit losses (11,180) (9,192) 21.6% (10,969) 1.9%

Tangible assets 5,008 4,518 10.8% 4,698 6.6%

Intangible assets 31,436 31,962 -1.6% 31,113 1.0%

Goodwill 27,218 28,312 -3.9% 27,218 0.0%

Others 4,218 3,650 15.6% 3,895 8.3%

Tax assets 16,250 14,842 9.5% 16,986 -4.3%

Other assets 3,322 2,468 34.6% 28,081 -88.2%

Hedging derivatives 81 116 -30.2% 79 2.5%

Non-current assets held for sale 132 67 n.a. 24,875 n.a.

Investments in associates 422 371 13.7% 418 1.0%

Others 2,687 1,914 40.4% 2,709 -0.8%

Total assets 399,886 374,663 6.7% 414,983 -3.6%


Financial liabilities held for trading 5,047 4,785 5.5% 6,637 -24.0%

Financial liabilities at amortized cost 291,451 253,341 15.0% 283,179 2.9%

Deposits from credit institutions 51,527 42,392 21.5% 42,362 21.6%

Customer deposits² 174,474 167,949 3.9% 178,638 -2.3%

Marketable debt securities 38,590 20,087 92.1% 38,112 1.3%

Subordinated liabilities 10,908 9,695 12.5% 10,603 2.9%

Other financial liabilities 15,952 13,218 20.7% 13,464 18.5%

Liabilities directly associated with non-current assets held for sale - - n.a. 22,349 n.a.

Liabilities for insurance contracts - 19,643 n.a. - n.a.

Provisions³ 9,515 9,395 1.3% 9,110 4.4%

Tax liabilities 11,876 10,530 12.8% 12,063 -1.6%

Other liabilities 3,965 3,605 10.0% 4,653 -14.8%

Hedging derivatives 36 - n.a. 25 n.a.

Other liabilities 3,929 3,605 9.0% 4,628 -15.1%

Total liabilities 321,854 301,299 6.8% 337,991 -4.8%

Total Equity4 78,032 73,364 6.4% 76,992 1.4%

Total liabilities and equity 399,886 374,663 6.7% 414,983 -3.6%

1. Unaudited balance sheet accountant

2. Includes repo.

3. Provisions for pensions and contingent liabilities. 0 - 0 - 0

4. Includes minority interest and adjustment to market value.

BALANCE SHEET¹

ASSETS (R$ Million)

LIABILITIES (R$ Million)

18


SECURITIES

The securities portfolio stood at R$ 75,257 million in the fourth quarter of 2011, up 0.7% in three months, but down 16.2% in the

twelve months, due to the transfer of “PGBL/VGBL fund quotas” to Zurich Santander Insurance America, S.L, as a result of the

sale of Santander Seguros, as outlined in page 8 of this document. Thus, for better comparability, we have excluded from the

earlier periods the amounts corresponding to the “PGBL and VGBL Fund Quotas”. In this comparison, total securities grew 3.9%

and 0.7% in twelve months and three months, respectively.

CREDIT PORTFOLIO

The credit portfolio stood at R$ 194,184 million in the fourth quarter of 2011, growing 20.9% in the last 12 months and 5.1 % in

the last three months. Excluding the effects of the appreciation in the Brazilian Real against U.S. Dollar, the credit portfolio grew

by 19.2% from December 2010.

Under IFRS, the credit portfolio does not include the acquisition of portfolios from other banks with full recourse. If we include

the balance of these acquisitions and exclude foreign exchange effects, the credit portfolio grew by 19.7%.

The expanded credit portfolio, which includes portfolio acquisitions and other operations with credit risk, grew by 21.3% in the

last 12 months and by 4.8% on the prior quarter. Other operations with credit risk were originated in the Corporate Segment.

Under BR GAAP, the expanded credit portfolio stood at R$ 208,846 million at the end of 2011, a climb of 20.9%in twelve months

and 4.5% in the quarter.

MANAGERIAL BREAKDOWN OF CREDIT ¹ Dec/11 Dec/10 Var. Sep/11 Var.

TO CLIENTS (R$ Million) Dec11xDec10 Dec11xSep11

Individuals 63,413 50,981 24.4% 60,170 5.4%

Consumer finance 30,459 26,969 12.9% 28,712 6.1%

SMEs 47,940 38,178 25.6% 44,179 8.5%

Corporate 52,373 44,431 17.9% 51,666 1.4%

Total 194,184 160,559 20.9% 184,727 5.1%

Other credit related transactions² 11,784 7,414 58.9% 11,367 3.7%

Acquired Portfólio3 2,894 4,200 -31.1% 3,176 -8.9%

Total expanded credit portfolio 208,862 172,174 21.3% 199,270 4.8%

Total guarantees 23,259 22,563 3.1% 22,246 4.6%

Total Expanded Credit Portfolio with guarantees 232,121 194,737 19.2% 221,516 4.8%

Total expanded² credit portfolio - BR GAAP (excluding guarantees) 208,846 172,792 20.9% 199,757 4.5%

1. SMEs and Corporate loans for the year 2010 have been reclassified for comparison purposes with the current period, due to re-segmentation of clients occurred in 2011.

2 - Includes Debenture, FIDC, CRI , Floating Rate Notes and Promissory Notes

3 - Credit portfolios, mainly Payroll loans, purchased with recourse from other banks.


Public securities 56,832 55,823 1.8% 54,827 3.7%

Private securities, funds quotas / others 14,190 11,443 24.0% 13,812 2.7%

PGBL / VGBL fund quotas - 17,423 n.a - n.a

Financial instruments 4,235 5,134 -17.5% 6,104 -30.6%

Total 75,257 89,823 -16.2% 74,743 0.7%

Total Securities (excluding PGBL / VGBL fund quotas) 75,257 72,400 3.9% 74,743 0.7%

SECURITIES (R$ Million)

19


LOANS TO INDIVIDUALS

In the end of 2011, loans to individuals came to R$ 63,413 million, growing

24.4% in the last 12 months. In the quarter it registered an increase of

5.4%, especially in products such as credit cards and mortgages, with

higher growth.

The credit card portfolio expanded by 31.5% in the last 12 months and by

14.1% in the quarter, reaching R$ 14,144 million in the fourth quarter of

2011.

Mortgage loans to individuals totaled R$ 10,018 million, up 49.6% in the

last 12 months and 12.8% in the quarter.

CONSUMER FINANCE

In 4Q11, the consumer finance portfolio totaled R$ 30,459 million, up 12.9%

in twelve months and 6.1% in the quarter. The accelerated growth in the

quarter mainly reflects the restructuring of the sales teams, with improved

risk management (automatic decision), adaptation of products and

operations, and strengthening of the sales team, which helped expanding the

client base.

CORPORATE AND SMES LOANS

Credit to corporate and Small and Medium Enterprises reached R$100,313

million in the fourth quarter of 2011, growing by 21.4% in the last 12

months and 4.7% in the quarter. Part of the growth in the last twelve

months is due to the exchange rate variation, since there are operations

indexed to foreign currency in this segment. Excluding this effect, growth

would be 18.0% in twelve months.

Loans to large companies came to R$52,373 million, up 17.9% in the last

12 months and 1.4% in the quarter. If we considered other operations

with credit risk, given that a significant portion of these operations was

originated in the large company segment, growth would be even higher.

Loans to small and medium companies totaled R$ 47,940 million in the

fourth quarter of 2011, growing 25.6% from the same period last year and of 8.5% in the quarter.

27.0 26.9 27.1 28.730.5

4Q10 1Q11 2Q11 3Q11 4Q11

Consumer FinanceR$ billion

51.0 53.5 56.6 60.2 63.4

4Q10 1Q11 2Q11 3Q11 4Q11

IndividualsR$ billion

44.4 45.0 46.6 51.7 52.4

38.2 39.2 41.044.2 47.9

82.6 84.2 87.695.8

4Q10 1Q11 2Q11 3Q11 4Q11

Corporate and SMEs LoansR$ billion

Corporate SMEs

100.3

20


INDIVIDUALS AND CORPORATE LOAN PORTFOLIO BY PRODUCT

The following table presents a breakdown of the credit portfolio by product. As mentioned earlier, growth in the Individuals

portfolio was led by mortgage loans and credit cards.

In the Corporate portfolio, the highlights were real estate credit, which grew by 16.5% in the last 12 months and working

capital/others.

BREAKDOWN OF MANAGERIAL CREDIT Dec/11 Dec/10 Var. Sep/11 Var.

PORTFOLIO BY PRODUCT (R$ Million) Dec11xDec10 Dec11xSep11

Individuals

Leasing / Auto Loans¹ 2,277 2,471 -7.9% 2,291 -0.6%

Credit Card 14,144 10,760 31.5% 12,394 14.1%

Payroll Loans² 15,142 13,800 9.7% 15,123 0.1%

Mortgages 10,018 6,698 49.6% 8,881 12.8%

Agricultural Loans 2,492 2,817 -11.5% 2,693 -7.5%

Personal Loans / Others 22,234 18,635 19.3% 21,964 1.2%

Total Individuals including acquired portfolio 66,307 55,181 20.2% 63,346 4.7%

Total Individuals excluding acquired portfolio 63,413 50,981 24.4% 60,170 5.4%

Consumer Finance 30,459 26,969 12.9% 28,712 6.1%

Corporate and SMEs

Leasing / Auto Loans 3,029 3,051 -0.7% 2,987 1.4%

Real State 6,280 5,392 16.5% 6,180 1.6%

Trade Finance 17,749 19,820 -10.4% 21,782 -18.5%

On-lending 9,070 8,077 12.3% 7,551 20.1%

Agricultural Loans 1,909 2,063 -7.5% 1,823 4.7%

Working capital / Others 62,276 44,206 40.9% 55,522 12.2%

Total Corporate and SMEs 100,313 82,608 21.4% 95,845 4.7%

Total Credit 194,184 160,559 20.9% 184,727 5.1%

Other Credit Risk Transactions with clients3 11,784 7,414 58.9% 11,367 3.7%

Total Expanded3 Credit Portfolio 205,968 167,974 22.6% 196,094 5.0%

Acquired portfolio4 2,894 4,200 -31.1% 3,176 -8.9%

Total Expanded3 Credit Portfolio including acquired portfolio 208,862 172,174 21.3% 199,270 4.8%

1. Including the loans to individual in the consumer finance segment, auto loan portfolio totaled R$ 27.556 MM no 4Q11,R$ 25,790 in 3Q11, R$ 24,173 million in 4Q10.

2. Includes Payroll Loan acquired portfolio

3. Includes Debentures, FIDC, CRI, Floating Rate Notes and Promissory Notes

4. Credit portfolios, mainly payroll loans, acquired from other banks.

21


FUNDING

Total funding, which includes funding from clients and assets under management, reached R$ 293,530 million in December

2011, increased 8.2% in twelve months and remained stable in the quarter.

Funding from clients reached R$ 180,508 million in December 2011, up 12.9% in twelve months and 1.2% in three months. The

growth in twelve months is partly the result of an important funding instrument - treasury notes (Letras Financeiras). This

instrument guarantees greater stability for funding, as the minimum maturity is two years. In addition, since December 2010,

the treasury notes (Letras Financeiras) have been exempt from reserve requirements, in contrast to Time Deposits, whose

reserve requirement increased from 23% to 32%.

In view of commercial objectives, we had a transfer of funds between saving accounts and Time Deposits, which did not impact

the evolution of total deposits (called funding from clients in the table below) but had an impact between the account lines.

Excluding this effect, the growth of time deposits and savings would be 8.6% and 6.9%, respectively, in twelve months, and

-0.9% and 7.0% respectively, in the quarter.

CREDIT/FUNDING RATIO

The following table shows the sources of funds used in credit operations, which includes deposits from clients, net of reserve

requirements, offshore and domestic funding, as well as securities issued abroad.

The credit/funding ratio reached 107% in December 2011.

The bank has a comfortable liquidity position and a stable and adequate funding structure.

FUNDING (R$ Million) Dec/11 Dec/10 Var. Sep/11 Var. Dec11xDec10 Dec11xSep11

Demand deposits 13,561 16,131 -15.9% 13,701 -1.0%

Savings deposits 23,293 30,304 -23.1% 30,271 -23.1%

Time deposits 83,942 68,916 21.8% 75,535 11.1%

Debenture/LCI/LCA¹ 39,787 37,892 5.0% 40,844 -2.6%

Letras Financeiras² 19,925 6,639 n.a. 18,077 10.2%

Funding from clients 180,508 159,882 12.9% 178,428 1.2%

Assets under management 113,022 111,338 1.5% 115,180 -1.9%

Funding from clients + AUM 293,530 271,220 8.2% 293,608 0.0%1. Debentures repurchase agreement, Real Estate Credit Notes (LCI) and

Agribusiness Credit Notes (LCA)

2. Bonds issued by Financial Institution on the domestic market also called treasury notes in this release.


Funding from clients (A) 180,508 159,882 12.9% 178,428 1.2%

(-) Reserve Requirements (44,787) (41,186) 8.7% (43,503) 3.0%

Funding Net of Compulsory 135,721 118,696 14.3% 134,925 0.6%

Borrowing and Onlendings 10,221 11,842 -13.7% 11,113 -8.0%

Subordinated Debts 10,908 9,695 12.5% 10,603 2.9%

Funding Offshore 24,592 19,237 27.8% 27,575 -10.8%

Total Funding (B) 181,442 159,470 13.8% 184,216 -1.5%

Total Credit (C) 194,184 160,559 20.9% 184,727 5.1%

C / B (%) 107% 101% 6.3 p.p. 100% 6.7 p.p.

C / A (%) 108% 100% 7.2 p.p. 104% 4.0 p.p.

1 - Bonds issued by Financial Institution on the domestic market

FUNDING VS. CREDIT (R$ Million)

22


BIS RATIO – BR GAAP

The BIS ratio reached 19.9% in December of 2011, down 2.2 p.p. from

the same period of 2010 and increase of 0.8 p.p. in the quarter.

Note that Brazilian regulation requires a minimum ratio of 11%.

The ratio below excludes unamortized goodwill1 while calculating the

regulatory capital.


Adjusted Tier I Regulatory Capital2 48,327 44,884 7.7% 47,724 1.3%

Tier II Regulatory Capital 6,642 7,433 -10.6% 6,775 -2.0%

Tier I and II Regulatory Capital2 54,969 52,317 5.1% 54,499 0.9%

Required Regulatory Capital 30,432 26,020 17.0% 31,406 -3.1%

Risk-weighted assets 276,655 236,545 17.0% 285,511 -3.1%

Basel II Ratio3 19.9% 22.1% -2.2 p.p. 19.1% 0.8 p.p.

Amounts calculated based on the consolidated information of the financial institutions (financial group)

2. Excludes the effect of goodwill relating to the merger of the shares of Banco Real and AAB Dois Par as per international rules.

OWN RESOURCES and BIS1 (R$ Million)

1-BR GAAP figures are used for calculating local regulatory capital. In BR GAAP, goodwill is amortized.

3. In accordance with Banco Central criteria, the BIS, including the goodwill, is 28.4% in Dec/10 and 24.8 for Dec/11.

19.0 17.5

3.12.4

22.119.9

Dec/10 Dec/11

BIS Ratio%

Tier II

Tier I

23

RESULTS BY SEGMENT

The bank has three business segments: Commercial

Banking, Wholesale Banking and Asset Management and

Insurance. Commercial Banking includes products and

services for retail, consumer-finance, SME and corporate

clients, except those served by Global Wholesale Banking

(GB&M). GB&M consists of products and services for global

corporate clients and treasury and investment banking

activities. The Asset Management and Insurance segment

includes asset management, saving bond activities and the

distribution of pensions and insurance products.

In the accumulated until December 2011, Commercial

Banking accounted for 64% of profit1 before tax according to IFRS, GB&M for 28% and Asset Management and Insurance for 8%.

Commercial Banking recorded profit1 before tax until December 2011 of R$ 6,775 million, a growth of R$ 700 million or 11.5%

from the same period of 2010.

Global Wholesale banking reported profit1 before tax of R$ 2,947 million until December 2011, a growth of R$ 129 million or

4.6% in the last 12 months.

Asset Management and Insurance posted profit¹ before tax of R$ 835 million until December 2011, increasing 0.4% or R$ 3

million over the same period the previous year. Notice that this result includes nine months of earnings from Santander Seguros,

since the sale² of the insurance underwriting unit was completed in October 2011. For more information see page 8 in this

document.

1- Calculation based on numbers management. Excludes Cayman Hedge

2- It’s important to note that the Insurance underwriting unit sale did not impact the revenues from the Insurance distribution.

6,074 6,775

2010 2011

Profit 1Before TaxCommercial BankingR$ million

11.5%

2,818 2,947

2010 2011

Profit 1 Before TaxGlobal Wholesale Banking

R$ million

4.6%

832 835

2010 2011

Profit1 Before TaxAsset Management and Insurance

R$ million

0.4%

Commercial Bank, 64%

Global Wholesale Banking,

28%

Asset Management

and Insurance,

8%

Profit before tax by segment2011

24

CARDS

CARDS - ISSUER

In 2011, Santander reinforced throughout the year, its strategy of expanding

its operations in the credit cards market.

We consolidated two important alliances: with Vivo and the Raízen Group.

Both partnerships aim to grow our client base by launching products that

offer exclusive advantages in the two companies’ areas of operation, in

addition to the differentials of Santander’s cards.

The partnership with Vivo is in the implementation stage and the marketing

of these products will begin in the second quarter of 2012. In 2012 we

started offering our products in the Esso Gas Station network and we should

launch the same products in Shell Gas Station network still in the first

quarter.

In addition to the new partnerships, we registered a sharp increase in non-

client acquisitions in the fourth quarter through our product portfolio and

continue to offer our clients differentiated products that are designed for

the diverse needs of our clients.

Through these initiatives, we continue to expand our client base, while

constantly seeking to improve client satisfaction.

NUMBER OF TRANSACTIONS AND FINANCIAL VOLUME

We ended the fourth quarter with 214 million credit card transactions, 0.7% more than in the third quarter and 11.2% more than in the same period a year earlier.

Financial transaction volume in 4Q11 came to R$ 37.7 billion, up 5.8% over the previous quarter and 11.3% more than in the same period a year earlier.

CREDIT CARD PORTFOLIO

Total credit card portfolio grew 13.7% in the quarter. The financed portfolio’s

share of this total increased from 27.7% in December 2010 to 29.9% in

December 2011.

CARD BASE

The credit card base shrank in comparison with the previous quarter, due to

the clean-up of the base in the pursuit of greater efficiency in expenses, as a

result of which the base totaled 12.4 million cards, up 8.2% in 12 months.

Debit cards reached 29.3 million in December 2011, up 13.4% in a year and


192.0 191.7 196.3212.0 213.5

4Q10 1Q11 2Q11 3Q11 4Q11

Number of credit cards transactions Million

33.930.7

33.635.6 37.7

4Q10 1Q11 2Q11 3Q11 4Q11

Turnover TotalR$ Billion

11.5 11.5 11.9 12.6 12.4

25.8 26.3 26.5 28.4 29.3

37.3 37.9 38.441.0 41.7

Dec/10 Mar/11 Jun/11 Sep/11 Dec/11

Card Basein Million

Debit Card Credit Card

3.1 3.6 4.0 4.2 4.3

8.0 7.58.1 8.6

10.2

Dec/10 Mar/11 Jun/11 Sep/11 Dec/11

Credit Card Portfólio

R$ Billion

Financed Non-financed

11.1 11.112.1 12.7 14.5

25

RISK MANAGEMENT

RISK MANAGEMENT

CORPORATE GOVERNANCE OF RISK FUNCTION

The structure of Banco Santander´s risk Committee Executive

is designed in accordance with the highest standards of

management and based on a prudent attitude toward risk and

knowledge of the customer:

To incorporate and adapt the bank´s risk culture to

local requirements, in addition to risk management

strategies and risk tolerance levels, all aligned with

the group´s corporate standards.

Approve proposals limits and policies for clients or

portfolios (retail and wholesale banking).

To deliberate on miscellaneous issues in connection

with market risk.

To be aware of, assess and adhere to any periodical

recommendations that come to be made by the

regulatory requirements, as well as the observations

from the Internal and Independent auditor and Audit

Committee.

To guarantee the activities performed by Banco

Santander are consistent with the risk tolerance level

previously approved by the Santander Executive

Committee and Board of Directors, and that the same

are in line with their policies.

Authorize the use of management tools and local risk

model and acknowledge the result in internal

validation processes.

The risk function at Banco Santander is performed by the

Office of the Executive Vice President of Credit and Market

Risks, which is independent from the business areas and

reports directly to the CEO of Banco Santander and the

Corporate Risk Officer of the Santander Group.

Further details of the structure, methodologies and risk

management control systems are provided by the report,

available on the website www.santander.com.br.

CREDIT RISK

The role of Credit function is to develop policies and strategies

for managing risk in accordance with the risk appetite set by

the Executive Committee and delegated by the Board of

Directors. In addition, is responsible for the monitoring and

control systems used in the management of credit. These

systems and processes are used in identifying, measuring,

controlling the risk exposure on individual transactions or

those grouped by similarity.

The risk management is segmented by specialization to attend

the specific characteristics of the clients and it can be

“individualized” (accomplished through a risk credit risk

analyst) or through “credit models” based on automated risk

assessment (for clients with similar characteristics).

MARKET RISK

Market risk is the exposure to risks such as interest rates, exchange rates, prices of goods, prices in the stock market and others according to the type of product, volume of operations, term and conditions of the agreement and underlying volatility. Practices are used in market risk management that include measuring and monitoring of the use of limits previously set by internal committees, the risk value of the portfolios, of the sensitivities to fluctuations in interest rates, foreign exchange exposure, the liquidity gaps, among others. This allows the monitoring of risks that may affect the positions of the bank portfolios in the various markets it serves.

Banco Santander operates according to global policies, within Banco Santander risk tolerance level, aligned with the objectives in Brazil and in the world. With this purpose, it has developed its own Risk Management model, according to the following principles:

Functional independence;

Executive capacity sustained by knowledge and proximity with the client;

Global and far-reaching of the function (different types of risk);

Collective decision-making, which evaluate a variety of possible scenarios and do not compromise the results with individual decision, including Brazil Executive Risk Committee (Comitê Executivo de Riscos Brasil), which delimits and approves the operations and the Asset and Liabilities Committee, which responds for the capital management and structural risks, including country-risk, liquidity and interest rates;

Management and improvement of the equation risk/return; and

Advanced methodologies for risk management, such as Value at Risk – VaR (historical simulation of 520 521 days with a confidence level of 99% and time horizon of one day), scenarios, financial margin sensibility, book value and contingency plan.

http://www.santander.com.br/

26

RISK MANAGEMENT

The Market Risks structure is part of the Vice Presidency of Credit and Market Risks, an independent area that aligns risk policies taking into consideration the local and global corporate definitions.

OPERATIONAL RISKS, INTERNAL CONTROLS AND SARBANES-OXLEY LAW

Banco Santander´s corporative areas, responsible for Technologic and Operational Risk Management and Internal Controls - SOX, are subject to different vice presidents, with structure, procedure, methodologies, tools and specific internal model guarantying through, managerial models, an adequate identification, capture, assessment, control, monitoring, mitigation and loss events reduction. In addition, management and prevention of operational, technological and business continuity plan risks, besides the improvement of the internal control model, satisfies the determinations of regulators, New Basel Accord - BIS II, and Sarbanes-Oxley requirements. Banco Santander also complies with the guidelines set out by Banco Santander Spain, which are based on the COSO - Committee of Sponsoring Organizations of the Treadway Commission – Enterprise Risk Management – Integrated Framework.

The procedures developed and adopted are intended to put and maintain Banco Santander among the financial institutions recognized as the entities with the best practices for the management of operational risks, contributing to continuously improve the reputation, soundness and reliability in the local and international markets.

Senior management is an acting party, aligned with the function’s mission, by recognizing, participating and sharing responsibility for the continuous improvement of this culture and framework of the technologic and operational risk management and the internal control system, in order to ensure the fulfillment of defined objectives and goals, as well as the security and quality of the products and services provided.

The Board of Directors of Banco Santander opted for the Alternative Standardized Approach (ASA) to calculate the regulatory capital ratio required for operational risk.

To comply with 2010 Sarbanes-Oxley section 404 requirements, an environmental and internal control efficiency revision has been conducted and completed in February 2011, and no material issues were identified. For the year ended December 31, 2011, the certification process will be completed by February, 2012. Key accomplishments and additional information, such as the establishment of the Operational Risk Executive Committee, which can be found at. www.ri.santander.com.br.

ENVIRONMENTAL AND SOCIAL RISK

Risk management for the Wholesale banking customers is

accomplished through a management system for customers

who have credit limits in relation to environmental aspects,

such as contaminated land, deforestation, working conditions

and other social and environmental points of attention in

which no possibility of penalties. A specialized team, trained in

biology, geology, chemistry and environmental health and

safety engineering that monitors the environmental practices

of our corporate clients and a team of financial analysts

studying the potential damage that can cause adverse

environmental situations to the financial condition of

customers and guarantees. The activity of analysis focuses on

preserving capital and reputation in the market through

constant training and commercial areas on the application of

credit risk social and environmental standards in the approval

process for corporate client credit.

27

SUSTAINABLE DEVELOPMENT AND CORPORATE GOVERNANCE

SUSTAINABLE DEVELOPMENT

In the final quarter of 2011, for the second consecutive year, Santander was included in the BM&FBovespa Corporate Sustainability Index (ISE), which will remain effective throughout 2012. The ISE comprises 38 companies from 18 industries with the market’s best sustainability practices and a total market cap of R$961 billion, equivalent to 43.72% of the total market cap of all companies listed on the BM&FBovespa. Santander's inclusion in the index is recognition for the quality and reach of its sustainability practices.

Another highlight was the opening of the Vila Cruzeiro branch, in Rio de Janeiro, which will contain an area constructed in association with AfroReggae for digital inclusion, training, and cultural activities. As the Complexo do Alemão branch, most of the Vila Cruzeiro personnel live in the local community, underlining Santander’s belief in the advancement of the region and its commitment to invest in this advancement. In addition to the standard services, the new branch will focus on microcredit as an incentive to small entrepreneurs.

Yet another important event was the 10th edition of the Amigo de Valor program. In October, approximately 29,800 employees and interns joined the program, which raised more than R$4.7 million, which will be allocated to 25 social programs.

In 2011, Santander completed 10 years of the Ethical Fund, which was the first socially responsible investment funds in Latin America.

Santander Universities consolidated several initiatives, with implementation of new projects and actions. Educafro entered into partnership with a body that promotes the inclusion of afro-descendants people in low-income public and private higher education. Santander Universities supports institutions of higher learning, public and private, through partnerships in academic projects, offer scholarships and banking products and services

CORPORATE GOVERNANCE

On October 25, 2011, Banco Santander held an Extraordinary Shareholders' Meeting, which elected Celso Clemente Giacometti as Chairman of the Board of Directors, and ratified the Long-Term Incentive Plan (SOP 2014) – comprising investments in Share Deposit Certificates (“Units”) for certain officers and managers of the Company and its subsidiaries.

In November 2011, Santander Brasil’s 2010 Annual Report

won the 13th

ABRASCA Award in Category 1, which comprises

publicly-traded companies with annual net revenue of R$2

billion or more. ABRASCA (Brazilian Association of Listed

Companies) is the main institution in Brazil for evaluating and

promoting improvements in the preparation of annual

company reports in regard to such aspects as clarity,

transparency, quality of information and innovative content

and layout.

At a meeting on November 23, 2011, Banco Santander’s Board

of Directors approved changes in the Company’s Securities

Trading Policy and Material Act or Fact Disclosure Policy in

order to comply with the current legislation and the practices

adopted by Santander Brasil.

The Extraordinary Shareholders' Meeting of December 16,

2011 approved the Board of Directors’ proposal to amend the

Company's Bylaws in order to comply with the

BM&FBovespa’s new Level 2 regulations, in place since May

2011.

On 21 December, the Board of Directors approved the proposed of the new incentive plan (deferred) for payment of the variable remuneration of the directors and certain employees, which will be subject to resolution of the Extraordinary General Meeting on 7 February 2012. In this proposal are set requirements for deferred payment in the future of the portion of variable compensation to its officers and other employees, taking into account the financial basis for sustainable long-term adjustments in future payments due to the risks assumed and fluctuations in capital cost. At this same meeting, the Board approved the amendment of the Bylaws of Corporate Governance, Ethics and Sustainability, which took effect from this date under the following title: Corporate Governance and Sustainability. Changing the name of the Committee was due to the exclusion of matters relating to the ethics of their competence, which will be the subject of discussion in another forum, and emphasizing skills relating to Corporate Governance and Sustainability.

28

SUMMARIZED BALANCE SHEET

SUMMARIZED BALANCE SHEET1

Dec/11 Sep/11 Jun/11 Mar/11 Dec/10

Cash and balances with the Brazilian Central Bank 65,938 65,296 62,659 57,443 56,800

Financial assets held for trading 29,901 29,783 31,400 23,541 24,821

Other financial assets at fair value through profit or loss 666 657 18,402 18,105 17,939

Loans and advances to credit institutions 61 93 145 212 292

Debt Instruments 230 229 214 210 224

Equity Instruments 375 335 18,043 17,683 17,423

Available-for-sale financial assets 44,608 44,237 55,680 52,171 47,206

Loans and receivables 202,757 194,132 182,637 178,758 174,107

Loans and advances to credit institutions 19,691 20,294 21,674 23,914 22,659

Loans and advances to customers 194,184 184,727 171,379 164,597 160,559

Debt Instruments 62 80 79 79 81

Allowances for credit losses (11,180) (10,969) (10,495) (9,832) (9,192)

Tangible assets 5,008 4,698 4,578 4,576 4,518

Intangible assets 31,436 31,113 32,080 31,949 31,962

Goodwill 27,218 27,218 28,312 28,312 28,312

Others 4,218 3,895 3,768 3,637 3,650

Tax assets 16,250 16,986 15,453 14,343 14,842

Other assets 3,322 28,081 3,981 3,102 2,468

Hedging derivatives 81 79 105 128 116

Non-current assets held for sale 132 24,875 47 65 67

Investments in associates 422 418 404 394 371

Others 2,687 2,709 3,425 2,515 1,914

Total assets 399,886 414,983 406,870 383,988 374,663

Dec/11 Sep/11 Jun/11 Mar/11 Dec/10

Financial liabilities held for tradingFinancial liabilities held for trading 5,047 6,637 5,337 4,898 4,785

Financial liabilities at amortized cost 291,451 283,179 280,311 261,011 253,341

Deposits from credit institutions 51,527 42,362 45,700 36,995 42,392

Customer deposits2 174,474 178,638 176,806 174,423 167,949

Marketable debt securities 38,590 38,112 32,590 26,907 20,087

Subordinated liabilities 10,908 10,603 10,276 9,974 9,695

Other financial liabilities 15,952 13,464 14,939 12,712 13,218

Liabilities directly associated with non-current assets held for sale - 22,349 - - -

Liabilities for insurance contracts - - 20,517 20,179 19,643

Provisions3 9,515 9,110 9,371 9,010 9,395

Tax liabilities 11,876 12,063 12,131 10,590 10,530

Other liabilities 3,965 4,653 3,923 3,584 3,605

Hedging derivatives 36 25 1 - -

Other liabilities 3,929 4,628 3,922 3,584 3,605

Total liabilities 321,854 337,991 331,590 309,272 301,299

Total Equity4 78,032 76,992 75,280 74,716 73,364

Total liabilities and equity 399,886 414,983 406,870 383,988 374,663

1. Unaudited balance sheet accountant

2. Includes repo. - - - - -

3. Provisions for pensions and contingent liabilities. - - - - -

4. Includes minority interest and adjustment to market value. (0) - - - -

ASSETS (R$ Million)

LIABILITIES AND EQUITY (R$ Million)

29

SUMMARIZED FINANCIAL STATEMENTS

SUMMARIZED MANAGERIAL FINANCIAL STATEMENTS

To provide a better understanding of the results in IFRS, we present the Managerial Income Statement. The main differences

from the Reported (Accounting) Income Statement are the adjustments made for the fiscal hedge operations of the investments

in the Cayman branch, for the unification of the accounting classification procedures for the leasing transactions of Santander

Leasing Arrendamento Mercantil and non-recurring events considered relevant. The effects from fiscal hedge that previously

were recorded in the line income tax were reclassified to the line gain (losses) from financial assets and liabilities. The tax hedge

results that were reclassified on the managerial income statement are presented below for the quarter.

Under Brazilian income tax rules, gains (losses) resulting from the BRL/USD exchange rate variation on the dollar-denominated

investments at the Cayman branch are not taxable (tax deductible). This tax treatment leads to foreign exchange rate exposure

in the tax line. A hedge position, composed of derivatives, was set up so that the Net Profit is protected from the FX variations

related to the foreign exchange exposure of the income tax line. Therefore, our effective tax rate and the income from gains

(losses) on financial assets and liabilities plus exchange rates differences are still impacted by foreign exchange fluctuations.

4Q11 3Q11 2Q11 1Q11 4Q10 3Q10 2Q10 1Q10

Interest and similar income 13,974 13,277 12,683 11,802 11,189 10,603 9,839 9,278

Interest and similar expense (6,370) (6,378) (5,923) (5,163) (4,690) (4,416) (3,832) (3,326)

Net Interest Income 7,604 6,899 6,760 6,639 6,499 6,187 6,007 5,952

Income from equity instruments 35 10 45 5 32 2 14 4

Share of results of entities accounted for using the equity method 7 13 15 18 10 11 13 10

Net fees 1,855 1,836 1,866 1,782 1,726 1,776 1,710 1,622

Fee and commission income 2,281 2,232 2,167 2,089 2,034 2,029 1,929 1,841

Fee and commision expense (426) (396) (301) (307) (308) (253) (219) (219)


differences (net)181 536 420 275 233 472 290 608

Other operating income (expenses) (158) (46) (147) (29) (138) (105) (60) (45)

Total income 9,524 9,248 8,959 8,690 8,362 8,343 7,974 8,151

General expenses (3,360) (3,086) (2,967) (2,959) (2,952) (2,849) (2,774) (2,655)

Administrative expenses (1,558) (1,441) (1,386) (1,343) (1,274) (1,373) (1,357) (1,300)

Personnel expenses (1,802) (1,645) (1,581) (1,616) (1,678) (1,476) (1,417) (1,355)

Depreciation and amortization (408) (359) (357) (338) (349) (309) (293) (286)

Provisions (net)¹ (738) (645) (624) (630) (381) (674) (290) (629)

Losses on assets (net) (2,336) (2,712) (2,306) (2,068) (1,955) (1,968) (2,356) (2,526)

Allowance for loan losses² (2,320) (2,703) (2,301) (2,059) (1,907) (1,961) (2,393) (2,522)

Losses on other assets (net) (16) (9) (5) (9) (48) (7) 37 (4)

Net gains on disposal of assets 6 15 (22) 29 (60) 35 48 117

Net profit before tax 2,688 2,461 2,683 2,724 2,665 2,578 2,309 2,172

Income tax (889) (659) (600) (653) (747) (643) (543) (409)

Net profit 1,799 1,802 2,083 2,071 1,918 1,935 1,766 1,763

1. Includes provisions for civil, labor and others litigations.


MANAGERIAL FINANCIAL STATEMENT ADJUSTED BY

CAYMAN'S FISCAL HEDGE (R$ Millions)

4Q11 3Q11 2Q11 1Q11 4Q10 3Q10 2Q10 1Q10


differences (net)(150) (2,050) 356 198 147 314 (140) (49)

Income tax 150 2,050 (356) (198) (147) (314) 140 49

CAYMAN'S FISCAL HEDGE (R$ Million)

1

ADDITIONAL FINANCIAL INFORMATIONS

ANNEXES Additional Unaudited Financial Information

December 31, 2011

INFORME DE RESULTADOS EM IFRS

CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2011 AND 2010

UNAUDITED ADDITIONAL FINANCIAL INFORMATION

(Thousands of Brazilian Reais - R$)

ASSETS 2011 2010

CASH AND BALANCES WITH THE BRAZILIAN CENTRAL BANK 65,938,003 56,800,151

FINANCIAL ASSETS HELD FOR TRADING 29,901,495 24,821,365

Loans and amounts due from credit institutions - 47,662

Debt instruments 25,298,804 16,472,413

Equity instruments 448,209 3,283,931

Trading derivatives 4,154,482 5,017,359

OTHER FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 665,369 17,939,781

Loans and amounts due from credit institutions 60,813 292,034

Loans and advances to customers - -

Debt instruments 230,037 224,388

Equity instruments 374,519 17,423,359

AVAILABLE-FOR-SALE FINANCIAL ASSETS 44,608,201 47,206,019

Debt instruments 43,300,354 45,477,982

Equity instruments 1,307,847 1,728,037

LOANS AND RECEIVABLES 202,757,191 174,106,525

Loans and amounts due from credit institutions 19,628,861 22,658,520

Loans and advances to customers 183,066,268 151,366,561

Debt instruments 62,062 81,444

HEDGING DERIVATIVES 80,708 115,640

NON-CURRENT ASSETS HELD FOR SALE 132,388 66,821

INVESTMENTS IN ASSOCIATES 422,225 370,586

TANGIBLE ASSETS 5,008,306 4,518,109

INTANGIBLE ASSETS 31,435,080 31,962,619

Goodwill 27,217,565 28,312,236

Other intangible assets 4,217,515 3,650,383

TAX ASSETS 16,250,373 14,842,066

Current 2,077,224 1,217,186

Deferred 14,173,149 13,624,880

OTHER ASSETS 2,686,743 1,913,001

TOTAL ASSETS 399,886,082 374,662,683

The accompanying Notes and Appendix I are an integral part of these consolidated financial statements.

CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2011 AND 2010



LIABILITIES AND EQUITY 2011 2010

FINANCIAL LIABILITIES HELD FOR TRADING 5,047,288 4,784,653

Trading derivatives 4,709,660 4,755,314

Short positions 337,628 29,339

OTHER FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS - -

Deposits from credit institutions - -

FINANCIAL LIABILITIES AT AMORTISED COST 291,451,686 253,340,771

Deposits from Central Bank and deposits from credit institutions 51,527,021 42,391,572

Customer deposits 174,473,891 167,949,201

Marketable debt securities 38,590,423 20,086,645

Subordinated liabilities 10,908,344 9,695,105

Other financial liabilities 15,952,007 13,218,248

HEDGING DERIVATIVES 36,071 112

LIABILITIES FOR INSURANCE CONTRACTS - 19,643,129

PROVISIONS 9,515,295 9,395,161

Provisions for pensions funds and similar obligations 1,246,040 1,190,108

Provisions for contingent liabilities, commitments and other provisions 8,269,255 8,205,053

TAX LIABILITIES 11,875,899 10,529,625

Current 8,127,795 6,249,466

Deferred 3,748,104 4,280,159

OTHER LIABILITIES 3,927,851 3,605,838

TOTAL LIABILITIES 321,854,090 301,299,289

SHAREHOLDERS' EQUITY 77,044,886 72,571,563

Share capital 62,634,585 62,634,585

Reserves 9,950,144 6,094,885

Treasury shares (112,768) -

Profit for the year attributable to the Parent 7,747,925 7,382,093

Less: dividends and remuneration (3,175,000) (3,540,000)

VALUATION ADJUSTMENTS 968,146 783,755

Available-for-sale financial assets 960,199 949,597

Cash flow hedges 7,947 (165,842)

NON-CONTROLLING INTERESTS 18,960 8,076

TOTAL EQUITY 78,031,992 73,363,394

TOTAL LIABILITIES AND EQUITY 399,886,082 374,662,683


CONSOLIDATED INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010


(Thousands of Brazilian Reais - R$, except for per share data)

2011 2010

Interest and similar income 51,736,080 40,909,204

Interest expense and similar charges (23,834,316) (16,814,126)

NET INTEREST INCOME 27,901,764 24,095,078

Income from equity instruments 93,727 51,721

Income from companies accounted for by the equity method 54,216 43,942

Fee and commission income 8,769,170 7,833,293

Fee and commission expense (1,429,672) (997,785)

Gains (losses) on financial assets and liabilities (net) (113,659) 1,458,150

Financial assets held for trading (902,167) 1,159,058

Other financial instruments at fair value through profit or loss 57,039 (26,828)

Financial instruments not measured at fair value through profit or loss 705,279 254,162

Other 26,190 71,758

Exchange differences (net) (121,364) 416,900

Other operating income (expense) (379,418) (347,999)

TOTAL INCOME 34,774,764 32,553,300

Administrative expenses (12,372,632) (11,230,602)

Personnel expenses (6,643,731) (5,926,176)

Other administrative expenses (5,728,901) (5,304,426)

Depreciation and amortization (1,462,034) (1,237,410)

Tangible assets (570,132) (487,626)

Intangible assets (891,902) (749,784)

Provisions (net) (3,061,463) (1,974,326)

Impairment losses on financial assets (net) (9,381,549) (8,233,810)

Loans and receivables (9,381,549) (8,232,912)

Other financial instruments not measured at fair value through profit or loss - (898)

Impairment losses on other assets (net) (38,646) (20,600)

Other intangible assets (17,070) (813)

Other assets (21,576) (19,787)

Gains (losses) on disposal of assets not classified as non-current assets held for sale 5,320 (59,186)

Gains (losses) on non-current assets held for sale not classified as discontinued operations 446,776 199,137

OPERATING PROFIT BEFORE TAX 8,910,536 9,996,503

Income taxes (1,154,683) (2,613,929)

CONSOLIDATED PROFIT FOR THE YEAR 7,755,853 7,382,574

Profit attributable to the Parent 7,747,925 7,382,093

Profit attributable to non-controlling interests 7,928 481

EARNINGS PER SHARE (Reais)

Basic and Diluted earnings per 1,000 share (Reais - R$)

Common shares 18.55 17.67

Preferred shares 20.41 19.44

Profit attributable (Reais - R$)

Common shares 3,948,342 3,761,914

Preferred shares 3,799,583 3,620,179

Weighted average shares outstanding (in thousands) - basic and diluted

Common shares 212,841,732 212,841,732

Preferred shares 186,202,385 186,202,385


CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010



Share

Capital Reserves

Treasury

Shares

Profit

Attributed

to the Parent

Dividends and

Remuneration

Total

Shareholders'

Equity

Balances at December 31, 2009 62,612,455 2,161,302 - 5,507,606 (1,575,000) 68,706,363 559,042 69,265,405 1,338 69,266,743

Total recognized income and expense - - - 7,382,093 - 7,382,093 224,713 7,606,806 481 7,607,287

Other changes in Equity

Appropriation of profit for the year - 5,507,606 - (5,507,606) - - - - - -

Dividends and interest on capital - (1,575,000) - - (1,965,000) (3,540,000) - (3,540,000) - (3,540,000)

Capital increase 22,130 (22,130) - - - - - - - -

Equity-instruments-based payments - 20,976 - - - 20,976 - 20,976 - 20,976

Other - 2,131 - - - 2,131 - 2,131 6,257 8,388

Balances at December 31, 2010 62,634,585 6,094,885 - 7,382,093 (3,540,000) 72,571,563 783,755 73,355,318 8,076 73,363,394

Total recognized income and expense - - - 7,747,925 - 7,747,925 184,391 7,932,316 7,928 7,940,244

Other changes in Equity

Appropriation of profit for the year - 7,382,093 - (7,382,093) - - - - - -

Dividends and interest on capital - (3,540,000) - - 365,000 (3,175,000) - (3,175,000) - (3,175,000)

Equity-instruments-based payments - 13,153 - - - 13,153 - 13,153 - 13,153

Treasury shares - - (112,768) - - (112,768) - (112,768) - (112,768)

Results of treasury shares - 13 - - - 13 - 13 - 13

Other - - - - - - - - 2,956 2,956

Balances at December 31, 2011 62,634,585 9,950,144 (112,768) 7,747,925 (3,175,000) 77,044,886 968,146 78,013,032 18,960 78,031,992


Equity Attributable to the Parent

Non-controlling

Interests

Total

Equity

Shareholders' Equity

Valuation

Adjustments Total

UNAUDITED ADDITIONAL FINANCIAL INFORMATION FOR THE PERIOD ENDED DECEMBER 2011 AND 2010

Financial assets

a) Breakdown by Category

Thousands of Reais

Financial

Assets Held

for Trading

Other Financial

Assets at Fair

Value through

Profit or Loss

Available-for-

Sale Financial

Assets

Loans and

Receivables Total

Loans and amounts due from credit institutions - 60,813 - 19,628,861 19,689,674

Of which:

Loans and amounts due from credit institutions, gross - 60,813 - 19,690,528 19,751,341

Impairment losses - - - (61,667) (61,667)

Loans and advances to customers - - - 183,066,268 183,066,268

Of which:

Loans and advances to customers, gross (1) (2)

- - - 194,184,437 194,184,437

Impairment losses - - - (11,118,169) (11,118,169)

Debt instruments 25,298,804 230,037 43,300,354 62,062 68,891,257

Equity instruments 448,209 374,519 1,307,847 - 2,130,575

Trading derivatives 4,154,482 - - - 4,154,482

Total 29,901,495 665,369 44,608,201 202,757,191 277,932,256

Thousands of Reais

Financial

Assets Held

for Trading

Other Financial

Assets at Fair

Value through

Profit or Loss

Available-for-

Sale Financial

Assets

Loans and

Receivables Total

Loans and amounts due from credit institutions 47,662 292,034 - 22,658,520 22,998,216

Loans and advances to customers - - - 151,366,561 151,366,561

Of which:

Loans and advances to customers, gross - - - 160,558,323 160,558,323

Impairment losses - - - (9,191,762) (9,191,762)

Debt instruments 16,472,413 224,388 45,477,982 81,444 62,256,227

Equity instruments 3,283,931 17,423,359 1,728,037 - 22,435,327

Trading derivatives 5,017,359 - - - 5,017,359

Total 24,821,365 17,939,781 47,206,019 174,106,525 264,073,690

b) Valuation adjustments for impairment of financial assets

Loans and receivables

Thousands of Reais 2011 2010

Balance at beginning of the period 9,191,762 10,070,479

Impairment losses charged to income for the period – Loans and receivables 11,190,887 9,050,547

Write-off of impaired balances against recorded impairment allowance (9,202,813) (9,929,264)

Balance at end of the period 11,179,836 9,191,762

Recoveries of loans previously charged off 1,809,338 817,635

c) Impaired assets


Balance at beginning of the period 9,348,648 9,899,884

Net additions 12,926,858 9,378,028

Written-off assets (9,202,813) (9,929,264)

Balance at end of the period 13,072,693 9,348,648

The breakdown by nature and category for measurement purposes, of the Bank’s financial assets, except for the balances relating to “Cash and Balances with the Brazilian Central

Bank” and “Hedging Derivatives”, at December 31, 2011 and 2010 is as follows:

2011

(1) On 2011, the Bank, through its branch in Grand Cayman, has acquired Banco Santander Spain, under common condition, portfolio consists of contracts for financing and export credit and import-related transactions

entered into with customers in Brazil or their foreign affiliates amounting updated of US$943 million (2010 - US$808 million).

(2) In December 2011, the Bank made a credit assignment with recourse amounting to R$688,821 thousand, with retention of risks and benefits; this sale was not written off. The agreements and parts there of purpose of

the assignment refer to real estate financing maturing up to October 2041. On December 31, 2011, the amount recorded on “Loans and advances to customers” referring to those assigned operations is R$686,587

thousand, and R$R$686,015 thousand of “Financial Liabilities Associated with the Transfer of Assets”.

2010

The changes in the balance of the allowances for impairment losses on the assets included under “Loans and Receivables” in the periods ended December 31, 2011 and 2010 were

as follows:

Considering these amounts recognized in “Impairment losses charged to income” and the "Recoveries of loans previously charged off", the "Impairment losses on financial assets -

Loans and receivables” amounted to R$9,381,549 thousand and R$8,232,912 thousand in the periods ended December 31, 2011 and 2010, respectively.

Detail of the changes in the balance of the financial assets classified as loans and receivables considered to be impaired due to credit risk in the periods ended December 31, 2011

and 2010 is as follows:


Investments in associates

a) Breakdown

The breakdown, by company, of the balance of “Investments in associates ” is as follows:

Thousands of Reais 2011 2010 2011 2010

Norchem Holding e Negócios S.A. 21.75% 21.75% 24,200 22,325

Norchem Participações e Consultoria S.A. (1)

50.00% 50.00% 22,528 28,525

Companhia de Crédito, Financiamento e Investimento RCI Brasil (1) (4)

39.64% 39.58% 132,514 106,939

Companhia de Arrendamento Mercantil RCI Brasil (1)

39.88% 39.88% 232,017 202,825

Cibrasec - Companhia Brasileira de Securitização (3)

13.64% 13.64% 10,287 9,972

Estruturadora Brasileira de Projetos S.A. - EBP (3)

11.11% - 679 -

Total 422,225 370,586


Norchem Holding e Negócios S.A. 4,074 1,780

Norchem Participações e Consultoria S.A. (1)

(2,973) 2,432

Companhia de Crédito, Financiamento e Investimento RCI Brasil (1)

25,424 21,025

Companhia de Arrendamento Mercantil RCI Brasil (1)

29,102 18,017

Celta Holding S.A. (2)

- 522

Cibrasec - Companhia Brasileira de Securitização (3)

909 166

Estruturadora Brasileira de Projetos S.A. - EBP (3)

(2,320) -

Total 54,216 43,942

(1) Joint-controlled company.

(2) Investment sold in 2010.

(4) The new composition of the Board of Directors is in approval process in the Brazilian Central Bank (Bacen). Participation will be changed to 39.58% after approval of the Bacen.

(*) Associates companies do not have their shares listed on the Stock Exchange.

(**) The Bank does not have collateral with associates.

Intangible assets - Goodwill

Based on the assumptions described above, the test carried out did not identified any impairment to goodwill in 2011 and 2010.


Breakdown:

Banco ABN Amro Real S.A. 27,217,565 27,217,565

Real Seguros Vida e Previdência - 1,094,671

Total 27,217,565 28,312,236

Operating segments:

Commercial Banking 27,217,565 27,217,565

Asset Management and Insurance - 1,094,671

Total 27,217,565 28,312,236

The changes of goodwill in December 31, 2011 and 2010 were as follows:


Balance at beginning of period 28,312,236 28,312,236

Disposals:

Real Seguros Vida e Previdência (3)

(1,094,671) -

Balance at end of period 27,217,565 28,312,236

(3) Although the participations was less than 20%, the Bank exercises control over the entity together with other major shareholders through a shareholders' agreement where no business decision can be taken by a single

shareholder.

Recorded goodwill is subject to impairment testing at least once a year or more frequently when there is indication that an asset is impaired, and was allocated according to the

operating segments.

The base used for the impairment test is the value in use. For this purpose, Management estimates cash flows, which is subject to several factors, including: (i) macroeconomic

projections of interest rates, inflation, exchange rate and other; (ii) behavior of the growth estimates for the brazilian financial system; (iii) increase in cost, returns, synergies, and

investment plans; (iv) customer behavior; and (v) growth rate and adjustments applied to cash flows in perpetuity. The adoption of these estimates involves the possibility that future

events cause actual results to be different from the projections.

Participation % Investments

Results of Investments


Asset Management

and Insurance (3)

2011 2010 2010

Main assumptions:

Basis of valuation

Period of the projections of cash flows (1)

10 years 10 years 3 years

Growth rate 5.0% 5.0% 4.5%

Discount rate (2)

15.2% 15.5% 15.2%

(2) The discount rate is calculated based on the capital asset pricing model (CAPM).

Sensitivity test was carried out of the main premises, changing possible reasonable, and was not identified any impairment to goodwill.

Financial liabilities

a) Breakdown by category

Thousands of Reais

Financial

Liabilities Held

for Trading

Financial

Liabilities at

Amortized

Cost Total

Financial

Liabilities Held

for Trading

Financial

Liabilities at

Amortized

Cost Total

- 51,527,021 51,527,021 - 42,391,572 42,391,572

Customer deposits - 174,473,891 174,473,891 - 167,949,201 167,949,201

Marketable debt securities - 38,590,423 38,590,423 - 20,086,645 20,086,645

Trading derivatives 4,709,660 - 4,709,660 4,755,314 - 4,755,314

Subordinated liabilities - 10,908,344 10,908,344 - 9,695,105 9,695,105

Short positions 337,628 - 337,628 29,339 - 29,339

Other financial liabilities - 15,952,007 15,952,007 - 13,218,248 13,218,248

Total 5,047,288 291,451,686 296,498,974 4,784,653 253,340,771 258,125,424

Provisions

a) Breakdown

The breakdown of the balance of “Provisions” is as follows:


Provisions for pensions funds and similar obligations 1,246,040 1,190,108

Provisions for judicial and administrative proceedings, commitments and other provisions 8,269,255 8,205,053

Of which:

Provisions for judicial and administrative proceedings, commitments and other provisions (1)

7,276,568 8,205,053

Provisions for judicial and administrative proceedings under the responsibility of former controlling stockholders (item b iv) 992,687 -

Total 9,515,295 9,395,161

(1) Includes mainly provisions for taxes and others legal, civil and labor contingencies.

b) Provisions for judicial and administrative proceedings, commitments and other provisions

i. Legal obligations and tax and social security contingencies (probable loss)

Commercial Banking

Value in Use: Cash Flows

(1) The projections of cash flow are prepared using internal budget and growth plans of the administration, based on historical data, market expectations and conditions such as industry growth, interest hate and inflation.

• PIS and Cofins - R$6,833,010 thousand (2010 - R$5,119,731 thousand): lawsuit filed by several companies of the conglomerate against the provisions of Law 9.718/1998,

pursuant to which PIS and Cofins must be levied on all revenues of legal entities. Prior to said provisions, already overruled by several recent decisions by the Federal Supreme

Court (STF), were levied only on revenues from services and sale of goods.

• CSLL - equal tax treatment - R$49,314 thousand (2010 - R$278,194 thousand) - lawsuits filed by several companies of the conglomerate challenging the application of an

increased CSLL rate (18% - 30%) for financial institutions as compared to the rate for non-financial companies (8% - 10%). These proceedings were not subject to the application

of Law 11941/2009.

• Increase in CSLL Tax rate - R$979,938 thousand (2010 - R$848,734 thousand) - The Bank and other companies of the conglomerate filed for an injunction to avoid the increase

in the CSLL tax rate established by Provisional Measure 413/2008, converted into Law 11,727/2008. Financial institutions were subject to a CSLL tax rate of 9%, however the new

legislation established a 15% tax rate.

• Service Tax (ISS) - Financial Institutions - R$542,443 thousand (2010 - R$473,371 thousand): refers to discussions in administrative and judicial proceedings against several

municipalities, which require the payment of ISS on several revenues from operations that are not usually qualified as service.

• Social Security Contribution (INSS) - R$288,137 thousand (2010 - R$259,526 thousand): refers to judicial and administrative proceedings on companies seeking collection of

social security contribution and education allowance on amounts that normally are not considered as salary.

(3) In 2011, the amount of Real Seguros Vida e Previdência was redeemed based on the process of the sale of the Santander Seguros.

The breakdown by nature and category for purposes of measurement, of the Bank’s financial liabilities, other than “Hedging Derivatives”, in the periods ended December 31, 2011

and 2010 is as follows:

2011 2010

Deposits from Central Bank and deposits from credit institutions

The main judicial and administrative proceedings involving tax and social security obligations are:


ii. Provisions for judicial and administrative proceedings - Labor contingencies

iii. Provisions for judicial and administrative proceedings - Civil contingencies

Refer to judicial proceedings related to civil lawsuits classified, based on the legal counsel’s opinion, as probable loss, for which provisions were recorded.

iv. Other lawsuits under the responsibility of former controlling stockholders

v. Contingent liabilities classified as possible loss risk

These are lawsuits brought by labor Unions, Associations, Public Prosecutors and former employees claiming labor rights they understand are due, especially payment for

overtime and other labor rights, including retirement benefit lawsuits.

• IRPJ and CSLL on Reimbursement Arising from Contractual Guarantees - The Federal Revenue Service issued infraction notices against Banco Santander, whose objects are

the collection of IRPJ and CSLL taxes for tax years 2002 to 2006 on amounts reimbursed by the former controlling shareholder of the Bozano Simonsen group arising from acts of

management responsibility, which payments were paid by the consolidated entities. The tax authority deemed the amounts deposited on behalf of these entities to be taxable

income and not reimbursements. In December 2011 the CARF judged the administrative process for the 2002 base period (R$438.7 million), offsetting the full assessment notice.

The decision may be appealed by the Authority by the last instance of CARF. The updated amount is approximately R$644 million.

• Addition to the Price on the Purchase of Shares of Banco do Estado de São Paulo S.A. - Banespa - Filed an ordinary action claiming the inexistence of legal relationship before

the National Treasury in relation to item 3.1 of the Banespa’s Share Purchase and Sale Agreement. Such item provided for the payment of an addition to the minimum price should

Banespa be released from the tax contingency recognized at the time of the privatization upon the setting of the minimum price. After an unfavorable lower court decision, on April

23, 2008, the 1st Region Federal Court accepted the appeal filed by the Bank and declared undue the collection. At these moment, awaits the decision on the appeal trial by the

Union. The updated amount involved is approximately R$422 million.

• Credit Losses - Administrative collection by the Federal Revenue Service in view of the deduction from the IRPJ and CSLL basis of credit losses once they would not have met

the conditions and terms laid down in the current legislation. The updated amount involved is approximately R$335 million.

• CSLL - equal tax treatment - Constitutional Amendment 10 from 1996 - Lawsuit regarding the difference from social contribution tax rate applied to financial institutions and

equivalent entities in the first half of 1996, as such tax rate was higher than the rates applied to other legal entities, which is contrary to the precedence and non-retroactivity

constitutional principle. The adjusted amount involved is approximately R$108 million.

• CSLL - Favorable and unappealable decision - This lawsuit claims to remove the requirements of the tax credit claimed by the Federal Revenue Service related to alleged

irregularities in the payment of CSLL. The Bank has granted a favorable final and unappealable decision that overrule the collection of CSLL under Law 7,689/1988 and Law

7,787/1989 in the period required by Federal Revenue Service. The updated amount involved is approximately R$170 million.

For claims considered to be similar and usual, provisions are recognized based on the history of payments made. Claims that do not fit into the previous criterion are assessed

individually, based on the status of each lawsuit, law and previous court decisions according to the assessment of the likelihood of a favorable outcome, and the risk assessment

made by the legal counsel.

Lawsuits for indemnity - seek indemnity for property damage and/or moral, relating to the consumer relationship on matters related to credit cards, consumer credit, bank

accounts, collection and loans and other operations. In the civil lawsuits considered to be similar and usual in ordinary course of Bank's activities, provisions are recognized based

on the history of payments made. Civil lawsuits that do not fit into the previous criterion are accrued according to the individual assessment made, and provisions are recognized

based on the status of each lawsuit, law and previous court decisions according to the assessment of the likelihood of a favorable outcome, and risk assessment made by the legal

counsel.

Economic Plans - efforts to recover the deficient inflation adjustments in savings accounts and judicial deposits arising from Economic Plans (Bresser, Verão, Collor I and II).

These refer to the lawsuits filed by savings accountholders disputing the interest credited by Banco Santander under such plans as they considered that such legal amendments

infringed on the rights acquired with regard to the application of the inflation indexes. Provisions are set aside for such lawsuits based on the average payments made historically.

Civil lawsuits that do not fit into the previous criterion are accrued according to the individual assessment made, and provisions are recognized based on the status of each lawsuit,

law and previous court decisions according to the assessment of the likelihood of a favorable outcome, and classification of the legal counsel. Banco Santander is also party in

public class action suits on the same issue filed by consumer rights organizations, Public Prosecutor’s Offices and Public Defender’s Offices. In these cases, the provision is made

only after the final unappealable sentence is handed down on the lawsuits, based on the individual execution orders. The Superior Court of Justice (STJ) position’s by the moment

is against the banks. The Supreme Court is still analyzing the subject and has already ordered the suspension of all cases except those which have not yet been judged or those

which are in an execution stage. The Supreme Court has decided favorably to the banks in similar cases involving CDBs (Bank Deposit Certificates) and the revision of

agreements (Tablita). However it has not definitively decided about the constitutionality of the rules involving Economic Plans. On April 14, 2010, the Superior Court decided that

the period of prescription for class actions regarding Economic plans is five years from each Economic Plan dates. With this decision, most actions, such as were proposed after a

period of 5 years will probably be dismissed, reducing the involved values. Still, in October 2011 the Supreme Court decided that the deadline for individual savers qualify in civil

class actions, it is also five years, counted from the res judicata of the respective sentence. Banco Santander believes that its defense’s arguments can be well succeed.

Refer to actions of tax, labor and civil in the amounts of R$969,485 thousand, R$14,150 thousand and R$9,052 thousand (2010 - R$455,841 thousand, R$30,764 thousand and

R$7,180 thousand), with the responsibility of the former controlling banks and acquired companies. Based on contracts signed, these actions have guaranteed reimbursement for

part of former controllers, whose respective duties were recorded under other assets.

Refer to judicial and administrative proceedings involving tax, labor and civil matters assessed by the legal counsels as possible losses, which were not accounted for. The main

lawsuits are:

• CPMF (tax on banking transactions) on Customer Operations - in May 2003, the Federal Revenue Service issued an Infraction Notice against Santander Distribuidora de Títulos

e Valores Mobiliários Ltda. (Santander DTVM), actual Produban Serviços de Informática S.A. and another Infraction Notice against the former Banco Santander Brasil S.A., both in

the amount of R$290 million. The notices refer to the collection of a CPMF tax credit on transactions conducted by Santander DTVM in the management of its customers’ funds

and clearance services provided by the Bank to Santander DTVM, according to the agreement between these two companies, in 2000, 2001 and the first two months of 2002. Both

companies consider that the tax treatment adopted was adequate since said transactions were subject to CPMF at zero rate. The Board of Tax Appeals (CARF) judged the

administrative proceedings, annulling the infraction notice of Santander DTVM and maintaining the infraction notice of the Bank. All these administrative proceedings are pending

of decisions at the end of their resources to the last instance of CARF. The updated amount of each proceeding is approximately R$564 million.


Equity

a) Issued capital

The capital, fully subscribed and paid, is divided into registered shares in dematerialized form, no par value.

Common Preferred Total Common Preferred Total

Brazilian Residents 16,000,704 16,052,894 32,053,598 38,084,679 36,130,149 74,214,828

Foreign Residents 196,841,028 170,149,491 366,990,519 174,757,053 150,072,236 324,829,289

Total 212,841,732 186,202,385 399,044,117 212,841,732 186,202,385 399,044,117

(-) Treasury shares (391,254) (355,685) (746,939) - - -

Total outstanding 212,450,478 185,846,700 398,297,178 212,841,732 186,202,385 399,044,117

b) Dividends and interest on capital

Dividend payments have been prepared and will continue to be prepared in accordance with Brazilian Corporate Law.

Common Preferred Units

Interest on capital (1)(5)(9)

600,000 1.4366 1.5802 158.0216

Interim Dividends (2)(5)

273,840 0.6556 0.7212 72.1211

Interim Dividends dividends (2)(5)(9)

476,160 1.1401 1.2541 125.4059


550,000 1.3168 1.4485 144.8532

Interim Dividends dividends (4)(5)(9)

100,000 0.2394 0.2634 26.3369


400,000 0.9592 1.0551 105.5127

Interest on Capital (7) (8) (9)

775,000 1.8590 2.0449 204.4944

Total in December 31, 2011 3,175,000

(1) Established by the Board of Directors in March, 2011, Common Shares - R$1.2211, and Preferred Shares - R$1.3432 and Units - R$134.3184, net of taxes.

(2) Established by the Board of Directors in May, 2011.

(3) Established by the Board of Directors in June, 2011, Common Shares - R$1.1193, and Preferred Shares - R$1.2313 and Units - R$123.1252, net of taxes.

(4) Established by Board of Directors in June, 2011.

(5) The amount of interest on capital and dividends intermediate / intermediate was paid on August 29, 2011.

(6) Established by the Board of Directors in September, 2011, Common Shares - R$0.8153, and Preferred Shares - R$0.8969 and Units - R$89.6858, net of taxes.

(7) Established by Board of Directors in December 2011.

(8) The amount of interest on capital will be paid on a date to be timely informed, without any compensation as monetary.

(9) The amount of interim dividends and interest on capital will be allocated entirely to the mandatory distribution of income for the year 2011.

• INSS on Profit Sharing (PLR) - refers to administrative and legal proceedings arising from tax assessments, which aim to collect social security contributions on payments made

by the Bank and the consolidated companies, as a PLR. The Tax Authorities have concluded that the requirements were not met the law. Against these charges were brought the

applicable appeals, because the Management believes that all procedures have been adopted under the law to characterize the nature of payment of PLR. The updated amount

involved is approximately R$273 million.

Before the annual shareholders meeting, the Board of Directors may establish the amount of dividends out of earnings based on (i) balance sheets or earning reserves from the last

balance sheet; or (ii) balance sheets issued in the period shorter than six months, in which case the payment of dividends shall not exceed the amount of capital reserves. These

payments are fully input into the mandatory dividend.

2011

Thousands of

Reais

Reais per Thousand Shares / Units

• Semiannual Bonus or Profit Sharing - Labor lawsuit relating to the payment of a semiannual bonus or, successively, profit sharing to retired employees from the former Banco do

Estado de São Paulo S.A. - Banespa, hired by May 22, 1975. This lawsuit was filed by Banespa’s Retirees Association and was judged by the Superior Labor Court and the Banco

Santander has filed an appeal, which the admissibility of the Supreme Court has been granted. The involved amount is not disclosed due to the current stage of the lawsuit and the

possibility of affecting its progress.

Thousand shares

2011 2010

On April 27, 2010, the Extraordinary Stockholders' Meeting approved the proposal of capital increase amounting to R$22,130 thousand, without the issuance of new shares, through

the incorporation of capital reserve, which was ratified by Bacen on June 24, 2010.

In accordance with the Bank’s bylaws, stockholders are entitled to a minimum dividend equivalent to 25% of net income for the year, adjusted according to legislation. Preferred

shares are nonvoting and nonconvertible, but have the same rights and advantages granted to common shares, in addition to priority in the payment of dividends 10% higher than

those paid on common shares, and in the capital reimbursement, without premium, in the event of liquidation of the Bank.


Common Preferred Units

Interest on capital (1)(4)

400,000 0.9577 1.0535 105.3477


500,000 1.1917 1.3168 131.6847


400,000 0.9577 1.0535 105.3477


530,000 1.2690 1.3959 139.5858


430,000 1.0295 1.1325 113.2488


1,280,000 3.0647 3.3711 337.1128

Total in December 31, 2010 3,540,000

(1) Established by the Board of Directors in March, 2010, Common Shares - R$0.8141 and Preferred Shares - R$0.8955 and Units - R$89.5456, net of taxes.

(2) Established by the Board of Directors in June, 2010.

(3) Established by the Board of Directors in June, 2010, Common Shares - R$0.8141 and Preferred Shares - R$0.8955 and Units - R$89.5456, net of taxes.

(4)The amounts for the interest on capital and intermediate dividends were paid on August 25, 2010.

(5) Established by the Board of Directors in September, 2010, Common Shares - R$1.0786 and Preferred Shares - R$1.1865 and Units - R$118.6479, net of taxes.

(6) Established by the Board of Directors in December, 2010, Common Shares - R$0.8751, and Preferred Shares - R$0.9626 and Units - R$96.2615, net of taxes.

(7) Established by the Board of Directors in December 2010.

(8) The amounts for the interest on capital and intermediate dividends were paid on February 25, 2011.

(9) The amount of interim dividend and interest on capital were fully allocated to mandatory dividend for the fiscal year 2010.

c) Treasury Shares

d) Strategic Partner in Brazil and Latin America

Business segment reporting

In accordance with IFRS 8, an operating segment is a component of an entity:

(c) for which discrete financial information is available.

Following such guidance, the Bank has identified the following business segments as its operating segments:

• Commercial Banking

• Global Wholesale Banking

• Asset Management and Insurance

2010

Until December 31, 2011, was acquired and held in treasury 5,380,800 Units, amounting to R$79,547 thousand. The minimum, weighted average and maximum cost per Unit is,

respectively, R$14.10, R$14.78 and R$16.06. The Bank also acquired and held in treasury 1,732,900 ADRs, amounting to R$33,221 thousand. The minimum cost, weighted

average and maximum price per ADR is US$10.21 . The market value of these shares on December 31, 2011 was R$14,96 per Unit and US$8.14 per ADR.

Additionally, during the period of 12 months ended in December 31, 2011, treasury shares were traded, refer to the services of a market maker that resulted in a gain of R$13,

recorded directly in equity in capital reserves.

On October 28, 2010 Santander Spain and Qatar Holding Luxembourg S.à rl II (QHL) signed a contract in terms of the Acquisition of convertible bonds, regarding the subscription

and payment by QHL the amount of US$ 2,718.8 million in bonds issued by Banco Santander Spain. These securities are mandatorily exchangeable for shares of Banco Santander

and amount to 5.00024% of its capital. These shares are paid an interest rate of 6.75% pa in dollars and mature by October 29, 2013.

This investment reflects the inclusion of QHL as a strategic partner of Group Santander Espanha in Brazil and in the remaining of Latin America. This operation allows Banco

Santander to advance in its commitment of 25% of capital free float . On December 31, 2011, except for convertible bonds, the QHL does not own, directly or indirectly, any shares,

warrants, subscription rights or options over the share capital of Banco Santander.

(a) that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the

same entity),

(b) whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its

performance, and

Thousands of

Reais (9)

Reais per Thousand Shares / Units

On November 9, 2010, the Board of Directors approved the Buyback Units Program issued by Banco Santander allowed purchase up to 1,452,282 Units, representing 79,875,510

common shares and 72,614,100 preferred shares, valid until November 9, 2011. However, in the meeting of Board Directors on August 24, 2011, the Buyback Program was

canceled and a new Buyback Units Program issued by the Bank was approved, for held in treasury or subsequent sale valid up to August 24, 2012.

The new Buyback Program aims to: (1) maximize value creations for shareholders through efficient management of capital structure and (2) enable the management of risk arising

from the provision , by the Bank, of market maker services in Brazil for certain index funds, where the Units are included in the index theoretical portfolio of reference of such funds,

according to the rules. Part of repurchased Units will be used by the Bank for protection (“hedge”) against the price flutuation of securities comprising the benchmark index, and

should be bought and sold in accordance with the policy of the Bank’s risk management.

The Buyback Program will cover the procurement of over to 57,006,302 Units, representing 3,135,346,633 common shares and 2,850,315,121 preferred shares, or ADRs (American

Depositary Receipts) by the Bank, or by its Cayman branch.

Still in November 9, 2010, the BMF&Bovespa has authorized the purchase of ADRs by Santander Madrid or its affiliates until 3% of the total shares issued by the Bank. Therefore,

adding the number of Units/ADRs that may be acquired by the Company and Santander Madrid and its affiliates, that on July 31, 2011 was 18.63%, and shares outstanding could be

reduced until 14.13%. This authorization does not imply in losses to the obligation assumed by Santander to reach a free float of 25% until October 7, 2012 (extendable under certain

conditions until October 7, 2014), provided in the Contract for Adoption of Corporate Governance Practices Level 2 signed with BMF&Bovespa.


The Bank operates in Brazil and abroad, through the Cayman branch, with Brazilian clients and therefore has no geographical segments.

The income statements and other significant data are as follows:

Thousands of Reais

(Condensed) Income Statement

Commercial

Banking

Global

Wholesale

Banking

Asset

Management

and Insurance Total

NET INTEREST INCOME 24,971,366 2,589,070 341,328 27,901,764

Income from equity instruments 93,727 - - 93,727

Share of results of entities accounted for using the equity method 54,216 - - 54,216

Net fee and commission income 6,191,891 796,350 351,257 7,339,498

Gains (losses) on financial assets and liabilities and exchange differences (1)

(753,198) 513,041 5,134 (235,023)

Other operating income/(expenses) (695,387) (29,304) 345,273 (379,418)

TOTAL INCOME 29,862,615 3,869,157 1,042,992 34,774,764

Personnel expenses (6,031,433) (525,525) (86,773) (6,643,731)

Other administrative expenses (5,431,219) (242,032) (55,650) (5,728,901)

Depreciation and amortization (1,331,287) (105,780) (24,967) (1,462,034)

Provisions (net) (3,024,150) 2,866 (40,179) (3,061,463)

Net impairment losses on financial assets (9,334,483) (47,066) - (9,381,549)

Net impairment losses on non-financial assets (33,743) (4,707) (196) (38,646)

Other financial gains/(losses) 452,096 - - 452,096

PROFIT BEFORE TAX (1)

5,128,396 2,946,913 835,227 8,910,536

Thousands of Reais

(Condensed) Income Statement

Commercial

Banking

Global

Wholesale

Banking

Asset

Management

and Insurance Total

NET INTEREST INCOME 21,301,329 2,501,318 292,431 24,095,078

Income from equity instruments 51,721 - - 51,721

Share of results of entities accounted for using the equity method 43,942 - - 43,942

Net fee and commission income 5,529,572 891,897 414,039 6,835,508

Gains (losses) on financial assets and liabilities and exchange differences (1)

1,550,319 244,408 80,323 1,875,050

Other operating income/(expenses) (596,271) (29,992) 278,264 (347,999)

TOTAL INCOME 27,880,612 3,607,631 1,065,057 32,553,300

Personnel expenses (5,354,100) (512,097) (59,979) (5,926,176)

Other administrative expenses (5,003,189) (215,499) (85,738) (5,304,426)

Depreciation and amortization (1,129,919) (57,718) (49,773) (1,237,410)

Provisions (net) (1,940,727) 4,039 (37,638) (1,974,326)

Net impairment losses on financial assets (8,225,451) (8,359) - (8,233,810)

Net impairment losses on non-financial assets (20,601) - 1 (20,600)

Other financial gains/(losses) 139,951 - - 139,951

PROFIT BEFORE TAX (1)

6,346,576 2,817,997 831,930 9,996,503

Thousands of Reais

Other aggregates:

Commercial

Banking

Global

Wholesale

Banking

Asset

Management

and Insurance Total

Total assets 345,579,236 51,045,367 3,261,479 399,886,082

Loans and advances to customers 148,372,380 34,653,359 40,529 183,066,268

Customer deposits 150,404,639 22,471,578 1,597,674 174,473,891

Thousands of Reais

Other aggregates:

Commercial

Banking

Global

Wholesale

Banking

Asset

Management

and Insurance Total

Total assets 308,973,195 40,139,949 25,549,539 374,662,683

Loans and advances to customers 121,175,888 30,149,793 40,880 151,366,561

Customer deposits 144,385,872 22,180,522 1,382,807 167,949,201

15. Related party transactions

The parties related to the Bank are deemed to include, in addition to its subsidiaries, associates and jointly controlled entities, the Bank’s key management personnel and the entities

over which the key management personnel may exercise significant influence or control.

The Commercial Banking segment encompasses the entire commercial banking business (except for the Corporate Banking business managed globally using the Global

Relationship Model). The Asset Management and Insurance segment includes the contribution to the Bank arising from the design and management of the investment fund, pension

and insurance businesses of the various units. The Global Wholesale Banking segment reflects the returns on the Global Corporate Banking business, those on Investment Banking

and Markets worldwide, including all the globally managed treasury departments and the equities business.

2011

2010

(1) Includes in the Commercial Bank, the fiscal hedge of investment on Cayman branch (a strategy to mitigate the effects of fiscal and exchange rate changes on investments offshore over the net income), which result is

recorded in “Gains/losses on financial assets and liabilities (net)” fully offset the tax line. The effects of the devaluation of the Real against the Dollar in 2011 generated losses of R$1,646,212 thousand. In 2010 were

recorded gains of R$272,131 thousand.

2011

2010


a) Key-person management compensation

i) Long-term benefits

ii) Short-term benefits

The following table shows the Board of Directors’, Executive Board’s and Audit Committee compensation:


Fixed compensation 48,997 45,078

Variable compensation 180,221 162,732

Other 11,818 8,659

Total (1)

(2)

241,036 216,469

iii) Contract termination

b) Lending operations

Under current law, it is not granted loans or advances involving:

I - officers, members of Board of Directors and Audit Committee as well as their spouses and relatives up to the second degree;

II - individuals or legal entities of Banco Santander, which hold more than 10% of the share capital;

III - Legal entities which hold more than 10% of the share capital, Banco Santander and its subsidiaries;

c) Ownership Interest

The table below shows the direct ownership interests (common and preferred shares) on December 31, 2011 and 2010:

Common Preferred Total Total

Shares Common Shares Preferred Shares

Stockholders' (thousands) Shares (%) (thousands) Shares (%) (thousands) Shares (%)

Grupo Empresarial Santander, S.L. (1)

72,876,994 34.2% 61,631,776 33.1% 134,508,770 33.7%

Sterrebeeck B.V. (1)

99,527,083 46.8% 86,492,330 46.5% 186,019,413 46.6%

Banco Santander, S.A. (1)

2,090,231 1.0% 1,900,210 1.0% 3,990,441 1.0%

Santander Insurance Holding, S.L. (1)

206,664 0.1% - 0.0% 206,664 0.1%

Employees 211,427 0.1% 193,458 0.1% 404,885 0.1%

Members of the Board of Directors (*) (*) (*) (*) (*) (*)

Members of the Executive Board (*) (*) (*) (*) (*) (*)

Others 37,929,333 17.8% 35,984,611 19.3% 73,913,944 18.5%

Total 212,841,732 100.0% 186,202,385 100.0% 399,044,117 100.0%

Common Preferred Total Total

Shares Common Shares Preferred Shares

Stockholders' (thousands) Shares (%) (thousands) Shares (%) (thousands) Shares (%)

Grupo Empresarial Santander, S.L. (1)

74,967,225 35.2% 63,531,986 34.1% 138,499,211 34.7%

Sterrebeeck B.V. (1)

99,527,083 46.8% 86,492,330 46.5% 186,019,413 46.6%

Santander Insurance Holding, S.L. (1) (2)

206,663 0.1% - 0.0% 206,663 0.1%

Employees 240,934 0.1% 220,512 0.1% 461,446 0.1%

Members of the Board of Directors (*) (*) (*) (*) (*) (*)

Members of the Executive Board (*) (*) (*) (*) (*) (*)

Others 37,899,827 17.8% 35,957,557 19.3% 73,857,384 18.5%

Total 212,841,732 100.0% 186,202,385 100.0% 399,044,117 100.0%

(1) Companies of the Santander Spain Group.

(*) None of the members of the Board of Directors and the Executive Board holds 1.0% or more of any class of shares.

At the meeting held on April 26, 2011, was approved the global compensation proposal of directors (Board of Directors and Executive Officers) for the year 2011, amounting to

R$283,540 thousand, covering fixed remuneration, variable and equity-based and other benefits. Additionally, was approved the global compensation of the Audit Committee

members for the period of 12 months from March 24, 2011, in the amount of up to R$3,960 thousand.

The Santander Brazil as well as Santander Spain, as other subsidiaries of Santander Spain Group, have long-term compensation programs tied to its share's performance, based

on the achievement of goals.

(1) Refers to the amount paid by Banco Santander to executive officers for the positions which they hold in the Bank and other companies of the conglomerate. And in 2011, includes the share incurred with the changes in

administrative structure and governance in the completion of the Bank's integration process.

(2) On 2011, were paid to the Directors of Santander Seguros and Santander Brasil Asset the amount of R$8,312 thousand (2010 - R$6,667).

Additionally, on 2011, charges were collected on key-person management compensation in the amount of R$22,768 thousand (2010 - R$23,547 thousand).

The termination of the employment relationship of managers for non-fulfillment of obligations or voluntarily does not entitle executives to any financial compensation.

IV - legal entities which hold more than 10% of the share capital, any of the directors or members of the Board of Directors and Audit Committee or management's own financial

institution, as well as their spouses or relatives up to the second degree.

2011

2010

(2) On August, 2010, a F-1 filling took place at CVM and SEC, which reported on the intention of sale of equity interest held by Santander Insurance Holding, SL, in the form of ADRs, in the United States market. Therefore,

4,538,420,040 common shares and 4,125,836,400 preferred shares were converted to compose 82,516,728 Units/ADRs (equivalent to ownership position of 2.17% in Banco Santander). Between the months of August to

December 2010, the equity position owned by SIH in the form of ADRs were totally alienated; 77,627,222 in the third quarter and 4,889,506 in the fourth quarter.


Amendment to Form F-3 and sales of ADS by Santander Group

Other disclosures

a) Off-balance-sheet funds under management

The detail of off-balance-sheet funds managed by the Bank is as follows:


Investment funds 104,877,454 102,516,308

Assets under management 8,144,334 8,822,049

Total 113,021,788 111,338,357

b) Third-party securities held in custody

Supplementary information – Conciliation of shareholders’ equity and net income

Thousands of Reais Note 2011 2010

Shareholders' equity attributed to the parent under Brazilian GAAP 65,578,565 64,850,978

IFRS adjustments, net of taxes, when applicable:

Pension plan discount rate c - -

Classification of financial instruments at fair value through profit or loss d 13,840 (251)

Redesignation of financial instruments to available-for-sale a 303,686 558,032

Impairment on loans and receivables b 1,128,106 220,590

e 545,763 300,000

Reversal of goodwill amortization f 9,786,227 6,682,775

Realization on purchase price adjustments g 708,533 639,520

Share based payments h 34,132 20,976

Others (85,820) 82,698

Shareholders' equity attributed to the parent under IFRS 78,013,032 73,355,318

Non-controlling interest under IFRS 18,960 8,076

Shareholders' equity (including non-controlling interest) under IFRS 78,031,992 73,363,394

Thousands of Reais Note 2011 2010

Net income attributed to the parent under Brazilian GAAP 3,557,203 3,863,298

IFRS adjustments, net of taxes, when applicable:

Pension plan discount rate c - (1,082)

Classification of financial instruments at fair value through profit or loss d 18,918 (17,887)

Redesignation of financial instruments to available-for-sale a 18,402 (16,300)

Impairment on loans and receivables b 907,516 219,630

e 245,763 82,795

Reversal of goodwill amortization f 3,103,452 3,241,146

Realization on purchase price adjustments g 69,013 (87,581)

Others (172,342) 98,074

Net income attributed to the parent under IFRS 7,747,925 7,382,093

Non-controlling interest under IFRS 7,928 481

Net income (including non-controlling interest) under IFRS 7,755,853 7,382,574

a) Redesignation of financial instruments to available-for-sale:

On December 31, 2011, the Bank held in custody marketable debt securities and equity instruments entrusted to it by third parties totaling R$72,825,358 thousand (2010 -

R$194,063,773).

Following the CVM Instruction 485/2010, we present a reconciliation of shareholders’ equity and net income attributed to the parent between Brazilian GAAP and IFRS, for each of

the periods presented, below:

Deferral of financial fees, commissions and inherent costs under effective interest

rate method

Deferral of financial fees, commissions and inherent costs under effective interest

rate method

On November 14, 2011, Banco Santander filed the application for registration of an amendment number 2 to the Registration Statement on Form F-3, which is valid automatically,

with the Securities and Exchange Commission (SEC), to allow the sale of ADS or Units of Banco Santander by the Santander Group companies or own Banco Santander.

Additionally, in terms of a prospectus supplement filed on November 16, 2011, any one shareholder of Banco Santander SA (Santander Spain), Grupo Empresarial Santander SL

(GES), and Banco Madesant - Sociedade Unipessoal S.A. (an affiliate company of the group) may offer for sale, periodically, to 310,832,288 ADS or Units of Banco Santander. The

purpose of these documents is to have available for sale on a registered basis, by Banco Santander and certain companies belonging to Grupo Santander, about 8% of the share

capital of Banco Santander. As reported by Banco Santander Spain, is the intention of Grupo Santander the record is used to: (i) allow greater flexibility to the Santander Group in

relation to the fulfillment of its commitment to deliver about 5% of its shareholding in Banco Santander on the terms of the exchangeable securities issued; and (ii) comply with the

commitment of Santander Spain to reach a free float of 25% in Banco Santander before October, 2012 (or subject to an agreement with BM&FBOVESPA, before October 2014),

when market conditions are appropriate. No registration with the CVM public offering of securities in Brazil was requested. On 9 January, 2012 the GES transferred to Santander

Spain ADRs representing approximately 5.18% of the capital of Santander Brasil, in an internal reorganization at the Santander Group, for the transfer of approximately 4.41% of the

capital of Santander Brasil to a third party that will deliver the same share to investors in the exchangeable securities issued by Santander Spain in October 2010 when due and as

provided in such securities. The exchangeable securities issued by Santander Spain has been the subject of a Material Fact dated October 29, 2010. As a result of these transfers

Santander Spain, directly or indirectly, now holds 78.14% of voting capital and 76.97% of the total capital of Santander Brasil, and the free float rose to 22.75% of total capital.

Under BRGAAP, the Bank accounts some investments as for example in debt securities at amortized cost and equity instruments at cost. Under IFRS, the Bank has classified

these investments as available-for-sale, measuring them at fair value with the changes recognized in consolidated statements of recognized income and expense, under the scope

of IAS 39 “Financial Instruments: Recognition and Measurement”.


b) Impairment on loans and receivables:

c) Pension plan discount rate:

d) Classification of financial instruments at fair value through profit or loss:

e) Deferral of financial fees, commissions and inherent costs under effective interest rate method:

f) Reversal of goodwill amortization:

g) Realization on purchase price adjustments:

• The amortization of the identified intangible assets with finite lives over their estimated useful lives.

h) Share based payments:

As part of the allocation of the purchase price when the acquisition of Banco Real, following the requirements of IFRS 3, the Bank has revalued its assets and liabilities of the

acquired to fair value, including identifiable intangible assets with finite lives. Under BRGAAP, in a business combination, the assets and liabilities are kept at their book value. This

purchase price adjustment relates substantially to the following items:

• The appropriation related to the value of assets in the loan portfolio. The initial registration of value of the loans at fair value, adjustment to the yield curve of the loan portfolio in

comparison to its nominal value, which is appropriated by its average realization period.

Banco Santander has a local long-term compensation plans linked to payments based in shares. According to IFRS 2 "share based payments", the amount of shares to be paid

should be measured at the fair value and accounted in equity, while in BRGAAP it is accounted in "Other Payables - Other".

On the income refers to the adjust based on estimated losses on loans and receivables portfolio, which was established with based on historical loss of impairment and other

circumstances known at the time of evaluation, according to the guidance provided by IAS 39 "Financial Instruments: Recognition and Measurement. These criteria differ in certain

aspects of the criteria adopted under BRGAAP, which uses certain regulatory limits set by the Central Bank. Additionally, the equity accumulated adjustments of the allocation of

purchase price when the acquisition of Banco Real, according to the requirements of IFRS 3 "Business Combinations".

In 2010, the BRGAAP used the discount rate used for benefit obligations reflects the nominal interest rate while IFRS, in accordance with IAS 19 “Employee Benefits” used the rate

to market yields of debts instruments. In December 2010, BRGAAP began to adopt CVM Resolution 600/2009, which eliminated the asymmetry with the international standard.

Under BRGAAP, all loans and receivables and deposits are accounted for at amortized cost. Under IFRS, in accordance with IAS 39 “Financial Instruments: Recognition and

Measurement” the financial assets can be measured at fair value and included in the category as “other financial assets at fair value through profit or loss” to eliminate or

significantly reduce the accounting mismatch the recognition or measurement derived from measuring assets or liabilities or recognizing gains or losses on them on different

bases, which are managed and their performance evaluated on the basis of fair value. Thus, the Bank classified loans, deposits and loans that meet these parameters, as the

"other financial assets at fair value through profit or loss", as well as certain debt instruments classified as “available for sale” under BRGAAP. The Bank has selected such

classification basis as it eliminates an accounting mismatch in the recognition of income and expenses.

Under IFRS, in accordance with IAS 39 “Financial Instruments: Recognition and Measurement”, financial fees, commissions and inherent costs that are integral part of effective

interest rate of financial instruments measured at amortized cost are recognized in profit or loss over the term of the corresponding contracts. Under BRGAAP these fees and

expenses are recognizes directly at income when received or paid.

Under BRGAAP, goodwill is amortized systematically over a period until 10 years and additionally, the goodwill recorded is measured annually or whenever there is any indication

that the asset may be impaired. Under IFRS, in accordance with IAS 38 “Intangible Assets”, goodwill is not amortized, but instead, is tested for impairment, at least annually, and

whenever there is an indication that the goodwill may be impaired; comparing its recoverable amount with its carrying value. The tax amortization of goodwill of Banco ABN Amro

Real SA represents a difference between book and tax basis of a permanent nature and definitive as the possibility of future use of resources to settle a tax liability is considered

remote by management, supported by the opinion of expert external advisors. The tax amortization of goodwill is permanent and definitive, and therefore does not apply to the

recognition of a deferred tax liability in accordance with IAS 12, on temporary differences.


APPENDIX I – SUBSIDIARIES OF BANCO SANTANDER (BRASIL) S.A.

Adjusted

Stockholders'

Activity Direct Indirect Equity Net Income

Asset Manager 99.99% 100.00% 187,770 73,977

Banco Bandepe S.A. (4)

Bank 100.00% 100.00% 4,408,918 378,659

Santander Leasing S.A. Arrendamento Mercantil (4)

Leasing 78.57% 99.99% 9,999,296 969,827

Aymoré Crédito, Financiamento e Investimento S.A. (4)

Financial 100.00% 100.00% 1,221,515 347,494

Santander Administradora de Consórcios Ltda. (4)

Buying club 100.00% 100.00% 4,231 173

Santander Brasil Administradora de Consórcio Ltda. (4)

Buying club 100.00% 100.00% 147,715 38,876

Santander Microcrédito Assessoria Financeira S.A. (6)

Microcredit 100.00% 100.00% 17,556 5,882

Santander Brasil Advisory Services S.A. (1) (6)

Other Activities 96.56% 96.56% 40,659 37,837

CRV Distribuidora de Títulos e Valores Mobiliários S.A. (CRV DTVM)(4)

(7)

Dealer 100.00% 100.00% 22,394 13,224

Santander Corretora de Câmbio e Valores Mobiliários S.A. (4)

Broker 99.99% 100.00% 253,076 60,353

Webmotors S.A. (6)


Santander Participações S.A. (1) (6) (7)

Holding 100.00% 100.00% 268,730 39,191

Santander Getnet Serviços para Meios de Pagamento S.A. (6)


Sancap Investimentos e Participações S.A. (Sancap) (2) (6)

Holding 100.00% 100.00% 241,716 146,248

Mantiq Investimentos Ltda (6) (9)

Other Activities 100.00% 100.00% 50 -

Santos Energia Participações S.A. (6) (9)

Holding 100.00% 100.00% 1,311 (144)

MS Participações Societárias S.A (6) (9)

Holding 78.35% 78.35% 15,712 397

Controlled by Sancap

Santander Capitalização S.A. (3) (5)

Savings and annuities - 100.00% 276,449 135,050

Controlled by Santander Participações S.A.

Insurance - 100.00% 166,876 34,469

Brazil Foreign Diversified Payment Rights Finance Company Securitisation - (a) - -

(a) Company over which effective control is exercised.

(3) Participation transferred to Sancap through the partial spin-off of Santander Seguros.

***

Thousands of Reais

Direct and Indirect controlled by Banco Santander (Brasil)

S.A.

Participation %

(6) The adjusted stockholders' equity and the net income are in accordance with accounting practices established by Brazilian Corporate Law, in conjunction to technical pronouncement of the CPC, correlated to the

International Financial Reporting Standards - IFRS.

(7) In Meeting held on August 31, 2011 were approved (i) of the partial split CRV DTVM by Santander Participações, and the version of the separated part refers exclusively to the entire stake held by CRV

DTVM in the

capital of Santander Securities (Brasil) Corretora de Valores Mobiliarios S.A. (Santander Securities), and (ii) the merger of Securities by Santander Participações. Both cases are in the process of approval by Bacen.

(8) The Extraordinary Shareholders’ Meeting held on October 29, 2010 of Real Corretora de Seguros S.A. (Real Corretora) and Santander Serviços, its shareholders approved the merger of the Real Corretora into

Santander Serviços, based on their net book values at the base date of September 30, 2010.

(9) Investiment acquired in 2011.

Santander Brasil Asset Management Distribuidora de Títulos e

Valores Mobiliários S.A. (4)

Santander S.A. Serviços Técnicos, Administrativos e de

Corretagem de Seguros (6) (8)

(1) In Meeting held on August 26, 2011, were approved: (i) change its name Santander Advisory Services S.A. to Santander Participações SA, (ii) change the name of Santander CHP S.A. into Santander Brazil Advisory

Services and (iii) amendment of its corporate purposes of both companies.

(2) Company in constitution stage.

(4) The adjusted stockholders' equity and the net income are in accordance with accounting practices established by Brazilian Corporate Law and standards established by the CMN, the Bacen and document template

provided in the Accounting National Financial System Institutions (Cosif) and the CVM, that does not conflict with the rules of Bacen.

(5) The adjusted stockholders' equity and the net income are in accordance with the pronouncements and interpretations issued by the Accounting Pronouncements Committee (CPC) and countersigned by the National

Council of Private Insurance (CNSP) and the Susep.

30

SUMMARIZED BALANCE SHEET

Documents

RESULTS - IFRS 2011 · 2012-01-31 · 4 HIGHLIGHTS IN PERIOD HIGHLIGHTS IN PERIOD RESULTS Net profit totaled R$7,755 million in 2011, up 5.1% (or R$373 million) in comparison to R$7,382